Annual Report • Mar 31, 2012
Annual Report
Open in ViewerOpens in native device viewer
| Financial Highlights | 2 |
|---|---|
| Directors and Advisers | 2 |
| Chairman's Statement | 3 |
| Business Review* | 4 |
| Board of Directors* | 12 |
| Directors' Report* | 13 |
| Corporate Governance* | 16 |
| Report on Directors' Board Attendance* | 20 |
| Directors' Remuneration Report* | 21 |
| Independent Auditors' Report | 27 |
| Consolidated Statement of Comprehensive Income | 28 |
| Consolidated Balance Sheet | 29 |
| Consolidated Cash Flow Statement | 30 |
| Consolidated Statement of Changes in Equity | 31 |
| Notes to the Financial Statements | 32 |
| Independent Auditor's Report | 49 |
| Liontrust Asset Management PLC Financial Statements | 50 |
| Liontrust Asset Management PLC Notes to the Financial Statements | 54 |
| Shareholder Information | 61 |
*These sections make up the Directors' Report.
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 on 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 report should be construed as a profit forecast.
Liontrust Asset Management PLC ("Liontrust", the "Company" or together with its subsidiary entities the "Group", as the context requires), is the holding company of a specialist fund management group providing process-driven portfolio management services. The Group currently manages approximately £2.1 billion in UK unit trusts, Dublin UCITS funds, Cayman Islands domiciled hedge funds, Guernsey domiciled offshore funds and institutional segregated accounts which are distributed to clients in the United Kingdom, continental Europe and internationally.
Loss for the year of £0.237 million (2011: Loss of £4.552 million).
Adjusted profit before tax of £1.001 million after adding back expenses for share incentivisation, severance compensation, gain on the sale of the credit business, acquisitions related costs, Global equities closure costs, cost reduction and restructuring, members advanced drawings, depreciation and intangible asset amortisation, and the Financial Services Compensation Scheme Interim Levy (2011: Adjusted loss before tax of £1.663 million)
Performance fees of £3.383 million were earned during the financial year (2011: £1.330 million) Net cash and financial assets of £14.2 million (2011: £12.6 million) Basic earnings per share (0.73) pence (2011: (14.69) pence)
Assets under management as at 31 March 2012 £1,529 million (2011: £1,343 million) Net fund flows for the year to 31 March 2012 of £152 million (2011: £81 million)
Adrian John Reginald Collins (Chairman) John Stephen Ions (Chief Executive) Vinay Kumar Abrol (Chief Operating Officer and Chief Financial Officer) Jonathan Michael Vernon Hughes-Morgan (Executive Director) Alastair William Stewart Barbour (Non-executive Director) Michael John Bishop (Non-executive Director) Glyn Vincent Hirsch (Non-executive Director)
2 Savoy Court, London WC2R 0EZ
Registered in England with Company Number 2954692
Mark Jackson Tower Bridge House St Katharine's Way London E1W 1DD
PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Erskine House 68-73 Queen Street Edinburgh EH2 4NH
Macfarlanes LLP 20 Cursitor Street London EC4A ILT
HSBC Bank PLC 60 Queen Victoria Street London EC4N 4TR
Singer Capital Markets Limited One Hanover Street London W1S 1YZ
Capita Registrars The Registry 34 Beckenham Road Beckenham Kent BR3 4TU
I am very pleased to report that Liontrust returned to profitability (on an adjusted basis) this year. This reflects a growth in assets under management ("AuM") to £1.5 billion at the end of March 2012, an increase of 14%, and increased performance fees. We have enjoyed a growth in revenues from Continuing Operations of 54% and seven successive quarters of net inflows. I am also pleased that we have continued to deliver strong long-term relative fund performance, and continue to keep costs under control.
Liontrust has been strengthened through two acquisitions. In March 2012, we announced the proposed acquisition of Walker Crips Asset Managers Limited ("WCAM"), which adds a further complementary UK equity investment team to Liontrust. Stephen Bailey and Jan Luthman are highly rated managers with an excellent track record and a strong pedigree in the key UK Equity Income sector. The feedback from the client base following the announcement has been extremely encouraging. We are confident they will benefit from stronger distribution at Liontrust with access to platforms and other distributors they were not available through, thereby making their funds accessible to a wider audience. The acquisition of WCAM was completed on 12 April 2012, increasing Liontrust's AuM to over £2 billion and giving us one of the strongest ranges of UK equity funds and teams.
We have announced two other transactions this year. These were the sale of our Credit business to Avoca Capital Holdings for 3.75% of AuM and the acquisition of the fund management business of Occam Investment Management (Malta) Limited, Occam Asset Management LLP and Occam Investment Services Limited (together "Occam"), expanding our fund management capability into Asia and Emerging Markets equities.
I am delighted with the speed of integration and the calibre of people that have joined us from Occam and WCAM. The recent soft launch of the Liontrust Asia Income Fund has been well received and I am confident we will grow assets strongly in this fund going forward. A high quality emerging markets team also joined us from Occam, which is another asset class for which we believe there will be strong demand in the future.
As previously stated, the Group intends to build the business organically and through acquiring new fund management teams. The Group continues to have a sound platform to evaluate opportunities to accelerate further growth in AuM. However, the focus for the coming year is on capitalising on our excellent investment performance, in particular grow AuM for our Asia and Emerging Markets teams, and successfully integrate the WCAM business.
We are also very mindful of the ever changing regulatory environment and the challenges that the Retail Distribution Review ("RDR") will bring both to the Group as a product provider and to the professional advisers who use our funds. Liontrust has actively participated in the lengthy consultation process and generally welcomes the introduction of RDR at the start of 2013.
As an active, performance driven investment business, Liontrust is well positioned to make the RDR transition. In 2010, the Group undertook a full review of our fund range and structure which resulted in the introduction of non-commission paying unit classes (in October 2010) specifically for the increasing number of intermediary clients who have already adopted a feebased business model.
Loss for the year was £0.237 million (2011: loss of £4.552 million).
Adjusted profit before tax of £1.001 million after adding back expenses for share incentivisation, severance compensation, gain on the sale of the credit business, acquisitions related costs, Global equities closure costs, cost reduction and restructuring, members advanced drawings, depreciation and intangible asset amortisation, and the Financial Services Compensation Scheme Interim Levy (2011: Adjusted loss before tax of £1.663 million).
Performance fees of £3.383 million were earned in the financial year to 31 March 2012 (2011: £1.330 million). Revenues from Continuing Operations increased by 54% compared to last year. Revenues from
Continuing and Discontinued Operations increased by 41%, reflecting the impact of increased AuM and the performance fees.
On 31 March 2012, our AuM stood at £1,529 million and were broken down by type and process as follows:-
| Process | Total £m |
Institutional £m |
UK Retail £m |
Offshore Funds £m |
|
|---|---|---|---|---|---|
| Cashflow Solution | 836 | 388 | 418 | 30 | |
| Economic Advantage | 616 | – | 616 | – | |
| Asia | 14 | – | 2 | 12 | |
| Emerging Markets | 11 | – | 11 | ||
| Indexed | 52 | – | 52 | – | |
| Total | 1,529 | 388 1,088 | 53 |
On 12 April 2012 Liontrust completed the acquisition of WCAM which added a further £581 million of assets to Group AuM.
AuM as at close of business on 18 June 2012 were £2,108 million.
A reconciliation of fund flows and AuM over the year is as follows:-
| Total £m |
Institutional £m |
UK Retail £m |
Offshore Funds £m |
|
|---|---|---|---|---|
| Opening AuM - 1 April 2011 | 1,343 | 395 | 843 | 105 |
| Inflows | 534 | 70 | 444 | 20 |
| Outflows | (382) | (75) | (236) | (71) |
| Net flows * | 152 | (5) | 208 | (51) |
| Disposal of the Credit business ** | (85) | – | – | (85) |
| Acquisition of Occam *** | 84 | – | – | 84 |
| Market movement | 35 | (2) | 37 | – |
| Closing AuM - 31 March 2012 | 1,529 | 388 | 1,088 | 53 |
* - Excludes credit business related flows post-13 April 2011 announcement of the sale of the credit business
** - Completed on 30 June 2011, includes credit business related outflows of £15million over the period 13 April 2011 to 30 June 2011
*** - Completed on 4 October 2011
In the current quarter from 1 April 2012 to 18 June 2012, Liontrust has recorded net inflows of £94 million.
Liontrust is well positioned to continue to expand over the next year. We have strong fund performance, we have expanded our fund management capability into new asset classes, we have broadened our client base in the UK and internationally and we have enhanced the profile of the business, our fund managers and our products. We are not only well positioned for the changes to the distribution market following the implementation of RDR at the start of 2013 but see it as an opportunity given our strong investment processes and performance.
Our focus remains on capitalising on the potential of our existing range of funds through our strong fund performance, broadened product range and enhanced distribution capability. We will expand our fund management capability further when the right opportunities present themselves.
Chairman 19 June 2012
Liontrust Asset Management PLC (the "Company" or "Liontrust", or together with its subsidiary entities, the "Group", as the context requires) is an independent fund management business that was founded in 1994 and listed on the London Stock Exchange in 1999. The business is focused exclusively on investment management and delivering out-performance for our clients and fellow investors. Liontrust manages UK, Europe, Asia and Emerging Markets equities for professional and private investors. These are managed in segregated institutional accounts, UK unit trusts, Dublin UCITS funds, offshore funds, individual savings accounts and hedge funds.
We have created a culture and environment to enable fund managers to perform. Fund managers can focus on running money and not get distracted by other day-to-day aspects of running a fund management business, particularly administration. We outsource many administrative functions to sharpen the focus on core areas of a fund management company – managing funds, sales and marketing.
We believe having the highest levels of professional standards, communicating clearly and frequently with our clients and the effective management of risk are also essential for Liontrust's continued growth and success.
Liontrust has made good progress during the financial year. The Group generated positive fund flows in every quarter, which has led to a second successive financial year of net inflows. Our assets under management ("AuM") have risen from £1,343 million on 31 March 2011 to £1,529 million on 31 March 2012, an increase of 14%. The acquisition of Walker Crips Asset Managers Limited, which completed on 12 April 2012, added a further £581 million to take our AuM, on a pro forma basis, to £2.1 billion.
During the year, Liontrust disposed of its credit business and acquired two fund management businesses (see section 1.2 below).
Alastair Barbour and Mike Bishop joined the Liontrust Board as Non-executive Directors. Jonathan Hughes-Morgan joined as an Executive Director on completion of the acquisition of the fund management business of Occam Investment Management (Malta) Limited, Occam Asset Management LLP and Occam Investment Services Limited (together "Occam") in October 2011.
We aim to grow AuM organically and, where the opportunity arises, through acquisitions and recruiting fund managers and teams. Growing AuM enhances the revenue that the business generates and, in conjunction with the management of costs, increases our profitability. Together, they will maximise returns to shareholders.
Continued growth in AuM will come through out-performance by our fund management teams along with an effective and broad distribution capability. To this end, fund managers are given the freedom to manage their portfolios according to their own investment processes and market views. Fund managers invest in the funds they manage, which shows a belief in and commitment to their investment processes and aligns their interests with those of their fellow investors.
Our fund management teams have distinct investment processes that are documented. Liontrust believes investment processes that are robust, scalable and repeatable are key to long-term performance and effective risk control. As processes are documented, clients know exactly how we manage money and therefore the fund or portfolio in which they are investing. This means the way we manage money at Liontrust is predictable. This aids clients' own processes of blending our funds with others in their portfolios.
Staying true to a documented investment process helps to create an in-built risk control, especially in environments that are more challenging for our processes, by preventing us buying stocks for the wrong reasons. Robust and good investment processes have the potential to deliver excellent long-term returns punctuated by short-term periods of under-performance.
We aim to provide good quality service, including clear and frequent communication, to our clients. We seek also to maintain the highest levels of professional standards and preserve Liontrust's corporate culture.
During the year, Liontrust disposed of its credit business and acquired two fund management businesses:
Growing AuM is a core strategic aim of our business. This is achieved through deepening relationships with and increasing sales from existing clients, broadening our client base and limiting redemptions in the UK, continental Europe and internationally. We aim to continue to improve our sales through long-term strong performance by our fund management teams, maintaining the high profile of Liontrust, our funds and fund managers, clearly articulating our distinct investment processes and why Liontrust funds are differentiated from many of the other funds in their respective sectors and good quality service levels and frequent communication with our clients.
Profitability will increase through continued growth in AuM and by rebuilding margin through the focused management and control of costs.
We believe in the highest levels of professional standards of our members and employees in all aspects of our business and especially when interacting with clients and suppliers. Our business is a "people business" and a key factor in whether clients invest in our funds is their interaction with members and employees at Liontrust along with the attention and level of service they receive. Therefore, we invest significantly in our people, including through training and qualifications.
Investment processes are the bedrock of all our funds and are integral to the culture at Liontrust. Processes are important because we believe they are key to long-term performance and effective risk control. No investment process will work 100% of the time. But robust and good processes have the potential to deliver excellent long-term returns punctuated by short-term periods of under-performance.
As the investment processes are documented, clients know exactly how we manage money and therefore how we manage our funds is predictable. Investment processes also act as a form of risk control on fund managers. Staying true to a documented process helps to create an in-built risk control by preventing fund managers from buying stocks for the wrong reasons.
Effective management of risk is essential for the Group's success. Our risk management framework is discussed further in this report on page 10 and in the risks and uncertainties section of the Directors' Report on page 14.
• We encourage individuals to develop their skills and be accountable and responsible for what they do.
Currently, Liontrust has five fund management teams with distinct investment processes.
Anthony Cross and Julian Fosh manage the Liontrust UK Growth, Liontrust Special Situations and Liontrust UK Smaller Companies funds according to the Economic Advantage investment process. Liontrust Special Situations Fund, for example, is in the first quartile of its sector over one, three and five years to 31 March 2012 and since launch on 11 November 2005.
Stephen Bailey and Jan Luthman manage the CF Liontrust Macro UK Growth, CF Liontrust Macro Equity Income and CF Liontrust Macro UK High Alpha funds according to the Liontrust Macro-Thematic investment process. CF Liontrust Macro Equity Income Fund, for example, was in the first quartile of its sector over three and five years to 31 March 2012 and since launch on 31 October 2003.
% returns (Quartile Ranking) to 31 March 2012
Gary West and James Inglis-Jones manage the Liontrust Income, Liontrust European Growth, Liontrust European Absolute Return and Liontrust European Long/Short funds according to the Cashflow Solution investment process. Liontrust European Growth Fund, for example, was in the first quartile over three and five years to 31 March 2012 and since launch on 11 November 2006.
Mark Williams and Carolyn Chan manage the Liontrust Asia and Liontrust Asia Income funds according to the Asia Equity investment process.
Eoghan Flanagan and James Mellersh manage the Liontrust Emerging Markets Absolute Return Fund according to the Emerging Markets Equity investment process.
| 1 year | 3 years | 5 years | Since Manager tenure |
Manager change/ launch date |
|
|---|---|---|---|---|---|
| The Liontrust Economic Advantage UK Growth Fund |
|||||
| (IMA UK All Companies) | 10.2% (1) | 94.9% (1) | – | 94.0% (1) | 25.03.09 |
| Special Situations Fund | |||||
| (IMA UK All Companies) | 12.6% (1) | 135.0% (1) | 56.0% (1) | 122.0% (1) | 11.11.05 |
| UK Smaller Companies Fund | |||||
| (IMA UK Smaller Companies) | 9.9% (1) | 122.6% (2) | 34.8% (1) | 332.7% (1) | 08.01.98 |
| The Liontrust Cashflow Solution | |||||
| Income Fund | |||||
| (IMA UK Equity Income) | 2.9% (2) | 68.9% (2) | – | 69.7% (2) | 25.03.09 |
| European Growth Fund | |||||
| (IMA Europe ex UK) | -9.4% (2) | 64.3% (1) | 18.2% (1) | 31.9% (1) | 15.11.06 |
| European Absolute Return Fund | |||||
| (IMA Absolute Return) | 2.7% (1) | – | – | 0.5% (4) | 09.07.09 |
| The Liontrust Macro Equity | |||||
| CF Liontrust Macro Equity Income Fund | |||||
| (IMA UK Equity Income) | 2.6% (2) | 69.8% (1) | 16.6% (1) | 122.9% (1) | 31.10.03 |
| CF Liontrust Macro UK Growth Fund | |||||
| (IMA UK All Companies) | 2.2% (2) | 68.5% (2) | 19.34% (1) | 166.3% (1) | 07.03.02 |
| CF Liontrust Macro UK High Alpha Fund | |||||
| (IMA UK All Companies) | -2.1% (4) | 61.8% (3) | 17.9% (1) | 17.3% (2) | 27.10.03 |
| The Liontrust Asia Equity | |||||
| Asia Income Fund | |||||
| (IMA Asia Pacific ex Japan) | – | – | – | -1.3% (4) | 05.03.12 |
| Index Fund | |||||
| FTSE 100 Tracker Fund | |||||
| (IMA UK All Companies) | 0.3% (3) | 63.2% (3) | 8.5% (2) | 168.7% (3) | 14.07.95 |
% Returns to 31 March 2012
| Since Manager |
Manager change/ |
||||
|---|---|---|---|---|---|
| 1 year | 3 years | 5 years | tenure | launch date | |
| The Liontrust Cashflow Solution | |||||
| European Absolute Alpha Fund | |||||
| (Dublin UCITS fund (Euro NAV)) | – | – | – | -3.0% | 15.02.12 |
| Sorbus Fund | |||||
| (Cayman hedge fund (Euro NAV)) | – | – | – | -6.6% | 05.10.11 |
| Pan European Fund | |||||
| (Dublin UCITS fund (Euro NAV)) | – | – | – | 17.5% | 05.10.11 |
| The Liontrust Asia Equity | |||||
| Asia Fund | |||||
| (Dublin UCITS fund (USD NAV)) | -15.2% | 62.0% | – | 15.4%* | 06.12.06 |
| The Liontrust Emerging Markets Equity | |||||
| Emerging Markets Absolute Return Fund | |||||
| (Dublin UCITS fund (USD NAV)) | -18.3% | – | – | -1.4%** | 06.12.06 |
* Data for full manager tenure is not available, data shown is from 10.09.08.
** Data for full manager tenure is not available, data shown is from 23.04.09.
It is important to remember that the price of units, and the income from them, can fall as well as rise and are not guaranteed and that past performance is not a guide to the future.
Because of the risks involved, investment in hedge funds and absolute return funds is suitable only for investors who are able to bear the loss of a substantial portion or even all of the money they invest in the funds, who understand the high risks involved, believe that investment in the funds is suitable for them based on their investment objectives and financial needs. Investors are urged to seek independent professional advice on the implications of investing in the funds.
UK RETAIL FUNDS Performance data source: Financial Express, Sterling terms, bid to bid basis, total return to 31 March 2012. The issue of units may be subject to an initial charge, which will have an impact on the realisable value of the investment, especially in the short term. The Funds' Prospectus or KIID are available direct from Liontrust or from our website, www.liontrust.co.uk.
OFFSHORE FUNDS Performance data sources: Liontrust Investment Partners LLP. Subscriptions must be made only on the basis of a prospectus, which is issued to authorised financial advisers and qualifying persons only.
We made good progress in sales and marketing during the financial year. The Group generated net inflows in every quarter, which led to a second successive year of net inflows. Net inflows in the financial year were £152 million and our AuM increased to £1,529 million from £1,343 million over the year. The higher net inflows have come from a broader number of clients. Of the Group's AuM, 71% come from the retail intermediary and private investor market while the rest is from institutional and international investors.
The net positive inflows are attributable to continued excellent fund performance and Liontrust achieving the sales and marketing goals set out in last year's Annual Report and Financial Statements.
Since launch or manager change to 31 March 2012, six of our ten actively managed unit trusts were in the first quartile of their respective sectors and of the other four funds, two were in the second quartile.
We have enhanced our level of engagement with clients and broadened our client base over the past year. We have sought to raise our profile across the institutional and intermediary market through a more proactive marketing strategy, including through advertising, press coverage, events, presentations and frequent client communications. In January 2012, around 120 clients attended our annual investment conference at The Savoy Hotel.
These initiatives have further developed the Liontrust brand, raised awareness of our strong fund performance, fund management teams and proprietary investment processes and explained how our funds are differentiated from their peers in their respective sectors.
Having completed the acquisition of Occam in October 2011, the Group soft launched the Asia Income Fund in March 2012, which is an asset class that we believe will generate increasing interest over the long term. The Occam deal has diversified our fund management capability into emerging markets equities and enhanced our international sales team in continental Europe and other overseas markets.
At the end of 2012 and after six long years of consultation and debate, Liontrust, in common with the rest of the retail financial industry, will implement the Retail Distribution Review ("RDR"). RDR is the most significant change to the industry in a lifetime and is likely to impact the sales and marketing activity of every fund firm competing in the retail investment market.
RDR has been undertaken with the aim of:-
At Liontrust we have actively participated in the lengthy consultation and as a consequence are well prepared for the challenges ahead. Our key client focus is on discretionary wealth managers and larger advisers who have already made the move away from the old "commission-based" model. Our active fund range is focused on the important areas of income and growth and, over the past two years, we have introduced a fund charging structure that is competitive and compatible with the market. Our fund performance continues to assist sales and we believe that our documented investment processes are sound, repeatable and scalable.
Whilst this may appear to be a "brave new world" the need for sound financial advice has never been greater and we believe that we offer products that are well suited to form the building blocks of clients' income or growth portfolios.
Loss for the year decreased to £0.237 million from a loss of £4.552 million last year, reflecting increased performance fees, sale of the credit business and lower exceptional expenses. Note 7 on page 40 shows the reconciliation of adjusted operating profit/(loss) and adjusted profit/(loss) before tax to profit/(loss) for the year.
Adjusted profit before tax increased to £1.001 million from a loss of £1.663 million last year, reflecting increased management fee revenues and performance fees.
| Year ended 31-Mar-12 £'000 |
Year ended 31-Mar-11 £'000 |
Year on Year Change |
|
|---|---|---|---|
| Gross profit from Continuing Operations | 13,638 | 8,849 | 54% |
| Gross profit from Discontinued Operations | 275 | 989 | (72%) |
| 13,913 | 9,838 | 41% | |
| Realised gain on sale of financial assets | 212 | 701 | (70%) |
| Director, employee and members | |||
| compensation (1) | (8,746) | (7,586) | 15% |
| Other Administration expenses (1) | (4,400) | (4,626) | (5%) |
| Adjusted operating profit/(loss) | 979 | (1,673) | 159% |
| Interest receivable | 22 | 10 | 120% |
| Adjusted profit/(loss) before tax (2) | 1,001 | (1,673) | 160% |
(1) Includes Continuing Operations and Discontinued Operations
(2) See note 7 on page 40 for reconciliation of adjusted profit before tax to profit for the year
• Revenues from Continuing Operations increased by 54% compared to last year. Revenues from Continuing and Discontinued Operations increased by 41% compared to last year and adjusted profit before tax increased by 160% to £1.001 million (2011: loss of £1.663 million), reflecting the impact of increased assets under management and the performance fees.
• Performance fees are included in gross profit at £3.383 million (2011: £1.330 million).
• Table (b) below sets out these and other relevant measures. Figures contained in the table do not provide absolute measures of success but, used sensibly, are a helpful guide to how we are progressing
| Year to 31-Mar-12 |
Year to 31-Mar-11 |
Year to 31-Mar-10 |
Year to 31-Mar-09 |
Year to 31-Mar-08 |
|
|---|---|---|---|---|---|
| Profit/(loss) for the year | (0.237) | (4,552) | (1,120) | 9,449 | 11,073 |
| Basic earnings per share (pence) | (0.73) | (14.69) | 3.64 | 28.32 | 26.03 |
| Adjusted Operating profit/(loss) (£'000) (2) | 979 | (1,673) | 785 | 13,756 | 16,229 |
| Adjusted Cost: income ratio (%) (2) | 93 | 118 | 95 | 62 | 60 |
| Change in gross profit (%) (1) | 54 | (25) | (64) | (12) | 36 |
| Change in employee and members related expenses (%) (1) (3) | 27 | (1) | (43) | (16) | 40 |
| Change in other administration expenses (%) (1) | (3) | 17 | (26) | 22 | 20 |
| Change in adjusted operating profit/(loss) (%) (2) | 159 | (313) | (94) | (15) | 37 |
| Performance related profit (£' 000) | 3,383 | 1,330 | 3,449 | 7,309 | 6,659 |
| Performance related earnings per share (pence) | 7.76 | 4.29 | 8.29 | 17.11 | 15.59 |
| AuM (£m) | 1,529 | 1,343 | 1,149 | 1,888 | 4,707 |
| Average headcount (1) | 46 | 40 | 54 | 45 | 41 |
| AuM per head (£m) | 33 | 34 | 21 | 42 | 115 |
| Gross profit (1) per head (£'000) | 296 | 221 | 242 | 797 | 996 |
| Adjusted operating (loss)/profit (2) per head (£'000) | 21 | (42) | 15 | 306 | 396 |
| Average AuM (£m) | 1,357 | 1,174 | 1,239 | 3,972 | 5,232 |
| Adjusted operating profit/(loss) (2) as % of average AuM | 0.07 | (0.14) | 0.06 | 0.35 | 0.31 |
| Gross profit (1) as % of average AuM | 1.01 | 0.75 | 1.05 | 0.90 | 0.78 |
| Adjusted profit/(loss) before tax (2) as % of average AuM | 0.07 | (0.14) | 0.06 | 0.36 | 0.33 |
(1) from Continuing Operations.
(2) Adjusted for expenses for share incentivisation, severance compensation, gain on the sale of the credit business, acquisitions related costs, Global equities closure costs, cost reduction and restructuring, members advanced drawings, depreciation and intangible asset amortisation, and the Financial Services Compensation Scheme Interim Levy.
(3) Member and employee related costs are the sum of Director and employee costs, members drawings charged as an expense, and members' advance drawings (where applicable).
The Group takes a cautious and pro-active approach to risk management. Management recognises the importance of understanding the risks to the business and the systems and controls required to mitigate them.
The Audit & Risk Committee, on behalf of the Board, is responsible for overseeing the Group's system of internal controls, including suitable monitoring procedures, which are designed to provide reasonable, but not absolute, assurance against material loss. The FSA have noted that it is for each individual firm to determine, based on its nature, scale and complexity, as well as its attitude to exposure to risk, whether or not to establish a Risk Committee of the governing body.
The Group has determined not to establish a separate Risk Committee, but to combine these responsibilities with the Audit Committee and have one joint Audit & Risk Committee although this is reviewed on an annual basis.
The Head of Risk is responsible for overseeing all risk management and legal functions of the Group and monitors our risks in a pro-active manner, with all departments fully aware of and managing the key risks appropriate to their responsibilities. Risk management and internal control is discussed in the Directors' Report on page 17.
In order to ensure that the Group regularly reviews and monitors all the potential areas of risk to the business, Liontrust has implemented a risk management framework which allows management, the Audit & Risk Committee and the Board to be kept fully informed of potential risks to the business and also how these risks would impact the group's capital adequacy. The diagram opposite summarises the Group's Risk Framework.
There are two main elements to capturing and reviewing risk within the Group; the Risk Register and the Internal Capital Adequacy Assessment Process ("ICAAP"). The Risk Register records potential risks, their materiality and their likelihood of occurrence and is updated on at least a quarterly basis with input from executives and function heads. The most material and likely risks, from the complete Risk Register, are reported to the main Board in a Key Risk Register. The ICAAP brings the Risk Register together with scenario analysis and stress testing to determine how the realisation of risks might impact on the Group's financial position.
The Group breaks risk down into four main categories that feed into the Risk Register and the ICAAP: Credit Risk, Market Risk, Operational Risk and Other Risk. Each element of risk is reviewed on a minimum of an annual basis, and the Group ensures appropriate controls are in place to manage these risks. These controls are monitored and reviewed within a comprehensive Compliance Monitoring programme alongside a monthly Risk Scorecard.
On the basis of disciplined risk assessment, the key risks to the Group's business are considered. These are detailed below and are also identified in the Risks and uncertainties section of the Directors' Report on Corporate Governance on page 14.
Our investment processes are fully documented, which enables clients to understand clearly how we manage assets. For private investors investing through intermediaries, the process documents are supplemented by simplified monthly fund factsheets, which are also clear and concise. For our institutional clients, we produce quarterly investment commentaries. Ensuring that our clients understand the product is a core element in treating them fairly. We believe our documented processes, detailed reports and literature reduce the likelihood of a product being misunderstood, reducing the risk of client losses in the event of portfolio underperformance.
Stability of our investment expertise is critical to the success of the business and the Group takes appropriate steps to manage expectations and minimise the loss of good quality fund managers.
As we outsource many of our labour intensive operational functions, we commit high levels of resource to the management of these third party providers. We work hard to ensure that the relationship is a collaborative one and that both parties are working together towards the same goals, via a dedicated relationship management team and through a comprehensive monitoring programme.
The management of operational (including financial) risk is formalised in a number of ways including regular monitoring of both internal departments and external third parties who undertake outsourced functions on behalf of the Group. Various regulatory tools are used, including an Operational Risk Scorecard, risk assessments, documented procedures and compliance manuals, a comprehensive compliance monitoring programme (covering internal departments and external third parties), issue tracking and an annual assessment of third party providers.
Chief Executive 19 June 2012
Adrian Collins, 58, (Chairman). Joined the Board in June 2009. Adrian has worked in the fund management business for over 30 years, a large part of which was at Gartmore Investment Management Limited where, latterly, he was the Managing Director. He was a consultant to Strand Partners Limited, a corporate finance business based in the West End of London. He is also the Non-executive Chairman of Bahamas Petroleum Company Plc and is also a Director of City Natural Resources High Yield Trust Plc, DouglasBay Capital Plc, New City High Yield Trust Plc and a number of other companies.
John Ions, 46, (Chief Executive). Joined the Board in May 2011. Prior to joining Liontrust in February 2011, John was Chief Executive of Tactica Fund Management since it was established in 2005. Previously, John was Joint Managing Director of SG Asset Management and Chief Executive of Société Generale Unit Trusts Limited, having been a co-founder of the business in 1998. John was also formerly Head of Distribution at Aberdeen Asset Management.
Vinay Abrol, 47, (Chief Operating Officer and Chief Financial Officer). Joined the Board in September 2004. Vinay is responsible for overseeing all finance, information technology, operations, risk and compliance of the Group. After obtaining a first class degree in computing science from Imperial College London, Vinay worked for W.I. Carr (UK) Limited specialising in the development of equity trading systems for their Far East subsidiaries, and then at HSBC Asset Management (Europe) Limited where he was responsible for global mutual funds systems. Following a short period at S.G. Warburg and Co., he joined Liontrust in 1995.
Jonathan Hughes-Morgan, 50, (Executive Director). Joined the Board in October 2011. Jonathan began his career as a trainee fund manager with Hendersons, moving after four years to Sun Life as a fund manager. Following spells at Odey Asset Management and Edmond de Rothschild, Jonathan joined Jardine Fleming to run their European business for three years. In 1998 he co-founded Thames River Capital with Charlie Porter. Jonathan was Managing Director of Thames River, leaving at the end of 2006 to set up Occam Asset Management. Jonathan graduated from the University of Warwick with a degree in Management Science.
Alastair Barbour, 59 (Non-executive Director). Joined on 1 April 2011. Alastair is a chartered accountant with 25 years' experience spent auditing and advising boards and management of public companies in the UK and internationally, principally in the financial services industry. He trained with Peat, Marwick, Mitchell & Co in London before being admitted as a partner with KPMG in Bermuda in 1985. Alastair returned to the UK as a partner of KPMG in 1991 and has specialised in financial services with extensive experience in advising on accounting, financial reporting and corporate governance. He is also a Director of RSA Insurance Group Plc, The Bank of N.T. Butterfield & Son Limited, Standard Life European Private Equity Trust Plc and CATCo Reinsurance Opportunities Fund Ltd and private companies CATCo Reinsurance Fund Limited and Scottish Equitable Policyholders Trust Limited.
Mike Bishop, 61 (Non-executive Director). Joined on 1 May 2011. Mike has more than forty years' experience as a fund manager and is currently a Non-executive Director of Hermes Focus Asset Management and an adviser to its UK equity activist funds. Before joining Hermes in 2005, Mike was Head of Pan-European Equities at Morley Fund Management Limited and a Director and fund manager at Gartmore Investment Management.
Glyn Hirsch, 50, (Non-executive Director). Joined the board in June 1999. Glyn is chief executive of Raven Russia Limited. He holds a number of other non-executive directorships. He is a law graduate of Southampton University and qualified as a Chartered Accountant with Peat, Marwick, Mitchell & Co. He also worked for 10 years as a corporate financier at UBS Limited.
The Directors present their report and the audited consolidated financial statements of Liontrust Asset Management PLC.
Liontrust Asset Management PLC is a holding company whose shares are quoted on the Official List of the London Stock Exchange and is domiciled and incorporated in England. It has three operating subsidiaries as follows:
| Subsidiary name | % owned by the Company |
Subsidiary principal activities |
|---|---|---|
| Liontrust Fund Partners LLP |
100% | A financial services organisation managing unit trusts, authorised and regulated by the Financial Services Authority. |
| Liontrust Investment Partners LLP |
100% | A financial services organisation offering investment management services to professional investors directly, through investment consultants and through other professional advisers, which is authorised and regulated by the Financial Services Authority. |
| Liontrust International (Guernsey) Limited |
100% | Incorporated in Guernsey, a financial services organisation managing investment funds, which is regulated by the Guernsey Financial Services Commission. |
In addition to the operating subsidiaries listed above, Liontrust Asset Management PLC has six other 100% owned subsidiaries. Liontrust Investment Funds Limited and Liontrust Investment Services Limited which act as a corporate member in Liontrust Fund Partners LLP and Liontrust Investment Partners LLP respectively. Liontrust Management Services Limited, which employed all employees of the Company until 31 October 2010, Liontrust European Investment Services Limited, which acted as investment manager for certain portfolios, and Liontrust Asset Managers Limited (previously Walker Crips Asset Managers Limited) and will be liquidated in due course.
On 13 March 2012, the Company announced that it had entered into a conditional share purchase agreement with Walker Crips Group Plc ("Walker Crips") to purchase (the "Acquisition") the entire issued share capital of Walker Crips Asset Managers Limited. The Acquisition completed on 12 April 2012 and the Company issued 1,851,719 new Ordinary shares, £4 million of convertible un-secured loan stock and £6.448 million in cash as consideration payable to Walker Crips, which included net assets of £0.448 million.
Loss for the year was £0.237 million (2011: loss of £4.552 million).
Loss for the year from Continuing Operations was £1.823 million (2011: £4,568 million). Profit for the year from Discontinued Operations (including the gain on the sale of the credit business) was £1.586 million (2011: £16,000).
Adjusted profit before tax was £1.001 million after adding back expenses share incentivisation, severance compensation, gain on the sale of the credit business, acquisitions related costs, Global equities closure costs,
cost reduction and restructuring, members advanced drawings, depreciation and intangible asset amortisation, and the Financial Services Compensation Scheme Interim Levy (2011: Adjusted loss before tax of £1.663 million)
A review of the business and future developments is set out in the Chairman's Statement and Business Review on page 3 and 4 to 11 respectively.
The Group's trade creditors arise from its role as a unit trust manager. Unit trust creations are paid for four days after the transactions and repurchase creditors are paid within four days of receipt of correctly completed renunciation documentation. Creditors arising in respect of expense costs are paid on a timely basis in the normal course of business and were not material as at 31 March 2012.
The Company made charitable donations during the year of £12,500 (2011: £nil), and made no political donations (2011: £nil).
The Directors of the Company during the year and up to the date of the signing of the financial statements were as follows:
Adrian Collins John Ions Vinay Abrol Jonathan Hughes-Morgan (appointed 4 October 2011) Alastair Barbour (appointed 1 April 2011) Mike Bishop (appointed 1 May 2011) Glyn Hirsch
Their interests in the share capital of the Company at 31 March 2012 are set out in the Remuneration Report on page 22.
The Company's share capital comprises of ordinary shares of 1 pence each. As at 31 March 2012, 37,108,600 Ordinary shares were in issue (2011: 35,344,890), representing 100 per cent. of the total voting rights the Company. There was one change to the issued share capital of the Company during the year; on 4 October 2011 the Company issued 1,763,710 new Ordinary shares.
Subsequent to the end of the financial year on 31 March 2012, the Company issued 36,236 new Ordinary shares on 4 April 2012 and 1,851,719 new Ordinary shares on 12 April 2012, as at 19 June 2012, 38,996,555 Ordinary shares were in issue, representing 100 per cent. of the total voting rights the Company.
On 12 April 2012 the Company issued £4 million in nominal value of convertible un-secured loan stock ("CULS"). The CULS carries interest at the rate of 6 per cent. per annum of the nominal value of the CULS. This interest accrues on a daily basis and is payable quarterly in arrears. Conversion of the CULS is on the basis of one Ordinary Share for each £1 in nominal value of the CULS on the following principal terms:
Unless previously redeemed, the CULS falls to be redeemed in full, together with all accrued interest thereon, on 12 April 2017.
Under Resolution 12 of the Annual General Meeting held on 13 September 2011, the shareholders authorised the Company to purchase its own shares pursuant to section 701 of the Companies Act 2006. This authority is limited to the maximum number of 5,298,199 Ordinary shares of 1 pence each (equivalent to approximately fifteen per cent of the issued share capital of the Company). This authority expires at this year's Annual General Meeting of the Company or 13 December 2012 (whichever is the earlier). The maximum price that may be paid for an Ordinary share will be the amount that is equal to 5 per cent above the average of the middle market prices shown in quotations for an Ordinary share in the London Stock Exchange Daily Official List for the five business days immediately preceding the day on which that Ordinary share is purchased. The minimum price which may be paid for an Ordinary share is 1 pence.
As at 31 March 2012 the Directors held the authority for the Company to purchase its own shares up to a maximum of 5,298,199 Ordinary shares of 1 pence each.
Renewal of the Company's power to purchase its own shares will be sought at the Annual General Meeting on 12 September 2012. In the event that the Company should purchase shares for cancellation, the Directors would only do so after consideration of the effect on earnings per share and the longer term benefits for shareholders.
The Company has received notifications in accordance with the FSA's Disclosure and Transparency Rule 5.1.2R of the following interests in 3% or more of the voting rights attaching to the Company's issued share capital as at 19 June 2012:
| Notifier | Number of voting rights |
Percentage of voting rights |
|---|---|---|
| Schroders Plc | 7,946,638 | 20.38 |
| Henderson Global Investors | 3,817,899 | 9.79 |
| Liontrust Asset Management Employee Trust | 3,727,335 | 9.56 |
| Artemis Investment Management LLP | 2,310,000 | 5.92 |
| Occam Asset Management LLP * | 1,799,946 | 4.62 |
* Jonathan Hughes-Morgan, Executive Director, is connected to Occam Asset Management LLP
A report on corporate governance appears on pages 16 to 19.
The Directors have identified the risk and uncertainties that affect the Group's business and 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 reputation 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 material 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 risk management 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 17.
Additionally the Group has a significant number of stakeholders whose future risks and uncertainties are linked to the Group. These significant stakeholders are: shareholders; clients; members; employees; service providers that provide the Group with outsourced functions; and industry bodies.
Each of these groups presents different risks and uncertainties and the Group ensures that there is regular contact and monitoring of the various bodies.
The Board recognises the Company's impact, responsibilities and obligations on and towards society and aims to reduce environmental risk.
The Company is committed to the highest standards of business conduct. Policies and procedures are in place to facilitate the reporting of suspect and fraudulent activities, including money laundering.
The Company's health and safety policy aims, insofar as it is reasonably practical, to ensure the health and safety of all employees and other persons who may be affected by the Company's operations and provide a safe and healthy working environment. The Company has a good record of safety.
The Group's financial instruments at 31 March 2012 comprise cash and cash equivalents, financial assets and receivable and payable balances that arise directly from its daily operations.
Receivables arise principally in respect of fees receivable on AuM, cancellations of units in unit trusts and sales of units in unit trusts, title to which are not transferred until settlement is received. The Group's credit risk is assessed as low.
Financial assets comprise assets held at fair value through profit and loss and assets held as available-for-sale.
Assets held at fair value through profit and loss are unit trust units and shares held in the 'manager's box' to ease the calculation of daily creations and cancellations.
Assets held as available-for-sale are shares in Liontrust Umbrella Fund Plc.
Cash flow is managed on a daily basis, both to ensure that sufficient cash is available to meet liabilities and to maximise the return on surplus cash through use of overnight and monthly deposits. The Group is not reliant on income generated from cash deposits.
Deposit banks are selected on the basis of providing a reasonable level of interest on cash deposits together with a strong independent credit rating from a recognised agency. Any banks selected for holding cash deposits are approved by the Board.
Based on holding the financial instruments as noted above the Group does not feel subject to any significant liquidity risks.
Full details of the Group's financial risk management can be found in note 2 on page 35.
The seventeenth Annual General Meeting of the Company will be held in the Pinafore Room at The Savoy, Strand, London WC2R 0EU on 12 September 2012 at 4 p.m. A notice convening this meeting will be sent to shareholders in August 2012.
The Following information is disclosed in accordance with section 992 of the Companies Act 2006:
As so far as the Directors are aware, there is no relevant information of which the Company's independent auditors are unaware. The Directors have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Company's independent auditors are aware of that information.
PricewaterhouseCoopers LLP were the independent auditors to the Company during the year and have confirmed their willingness to continue in office. A resolution to reappoint PricewaterhouseCoopers LLP as auditors to the Company and to authorise the Directors to fix their remuneration will be proposed at the 2012 Annual General Meeting.
Mark Jackson, Company Secretary. Registered Office: 2 Savoy Court, London WC2R 0EZ. 19 June 2012
The Company complied throughout the year with the provisions of section 1 of the UK Corporate Governance Code (2010) ("the Code") and with the Schedules as explained below.
The Board is responsible for organising and directing the affairs of the Company and the Group in a manner that is in the best interests of the shareholders, meets legal and regulatory requirements and is also consistent with good corporate governance practices. There is a formal document setting out the way in which the Board operates, which is available upon request from the Company Secretary.
The division of responsibilities between Adrian Collins, Chairman, and John Ions, Chief Executive, has been clearly established by way of written role statements, which have been approved by the Board. The Chairman's main responsibilities are to lead the Board, ensure that shareholders are adequately informed with respect to the Company's affairs and that there are efficient relations and communication channels between management, the Board and shareholders, liaising as necessary with the Chief Executive on developments, and to ensure that the Chief Executive and his executive management team have appropriate objectives and that their performance against those objectives is reviewed.
The Chief Executive's main responsibilities are the executive management of the Group, liaison with the Board and shareholders (as required by the Chairman), to manage the strategy of the Group, to manage the senior management team, oversee and manage the sales and marketing teams, and to be an innovator and facilitator of change. The Chief Executive discharges his responsibilities in relation to the executive management of the Group via three executive management committees; the Fund Management Group Committee (the "FMG"), the Asset Gathering Group Committee (the "AGG"), and the Operations Management Group Committee (the "OMG"). The OMG meets fortnightly and the AGG and FMG meet monthly with key representatives from each committee attending the other committee meetings.
The Chairman and Chief Executive are responsible, to the Board for the executive management of the Group and for liaising with the Board and keeping it informed on all material matters.
Under the Company's articles of association, one third of the Directors must retire from office by rotation at each Annual General Meeting and may offer themselves for re-election (this does not include Directors appointed to the Board since the last Annual General Meeting). Under the Company's Corporate Governance Guidelines, which reflect the provisions of the Code on Corporate Governance, Non-executive Directors must retire and may offer themselves for re-election annually once they have served nine or more years on the Board. The UK revised Corporate Governance Code which will applies from 1 April 2011 recommends that all Directors of FTSE 350 companies retire and are put up for re-election at the Annual General Meeting. Although the Company is not a FTSE 350; the Board considers this to be best practice and, accordingly, has decided to go beyond the requirements of the Company's Corporate Governance Guidelines and articles of association and require that all Directors of the Company retire and offer themselves for re-election.
The Board met seventeen times during the year. In addition, there were occasions when the Directors met as a committee of the Board in order to authorise transactions already agreed in principle at Board meetings. On those occasions, a quorum of either two or three Directors was required.
Biographical details of all current Directors can be found on page 12. Changes to the composition of the Board during the year and up to the date of the signing of the financial statements were as follows:
| 1 April 2011 | Alastair Barbour joined the Board as a |
|---|---|
| Non-executive Director | |
| 1 May 2011 | Mike Bishop joined the Board as a Non-executive |
| Director | |
| 4 October 2011 | Jonathan Hughes-Morgan joined the Board as an |
| Executive Director |
There were no other changes to the Board during the financial year and up to the date of the signing of the financial statements. Attendance at meetings of the Board and the Audit & Risk, Nomination and Remuneration Committees is shown in the table on page 20.
At all times during the year there have been at least two Non-executive Directors. The Board believes that the balance achieved between Executive and Non-executive Directors is appropriate and effective for the control and direction of the business. Given the extensive experience of the Non-executive Directors, the Board does not believe the identification of a senior Nonexecutive Director (Code A.3.3), is required.
The Chairman has met during the year with the Non-executive Directors both individually and collectively without the other Executive Directors.
Having duly evaluated each of the Non-executive Directors the Board considers that, notwithstanding the provisions of the Code, all such Directors are independent, in that they neither represent a major shareholder group nor have any involvement in the day to day management of the Company or its subsidiaries. As such they continue to bring objectivity and independent judgement to the Board and complement the Executive Directors' skills, experience and detailed knowledge of the business.
None of the Executive Directors and the Chairman are on the Board of a FTSE 100 company.
Non-executive Directors are aware that they have to report any change in their circumstances or those of the members of their families that might lead to the Board reconsidering whether they are independent. Directors are also aware that they have to inform the Board of any conflict of interest they might have in respect of any item of business and absent themselves from consideration of any such matter.
The Non-executive Directors have disclosed to the Company Secretary their significant commitments other than their directorship of the Company and have confirmed that they are able to meet their respective obligations to the Company.
Directors have the right to have any concerns about the running of the Company minuted and documented in a written statement on resignation.
The Company has arranged insurance cover in respect of legal action against its Directors and Officers.
The Board conducts a formal review and rigorous evaluation of individual Directors, its own performance and that of its committees. The evaluation process is constructively used to improve Board effectiveness, maximise strength and address weakness.
The Executive Directors have been subject to a formal performance appraisal. These appraisals were carried out in May 2012 and in all cases their performance was appraised as continuously effective. The performance of the Non-executive Directors during the year to 31 March 2012 has been reviewed by the Executive Directors. The review has confirmed that the performance of the Non-executive Directors is continuously effective and appropriate.
In addition to the individual appraisals, the Board considers its overall performance as a body and of its committees.
Every Director is entitled to receive appropriate training and guidance on their duties and responsibilities. Continuing professional development is offered to all Directors and the Board is given guidance on new developments, such as new regulatory requirements.
In order to promote awareness and understanding of the Group's operations, the Chairman ensures there are additional opportunities for the Non-executive Directors to meet with senior management outside of the Board and its committees.
The views of the investors are conveyed to Non-executive Directors by the presentation at Board meetings of surveys of shareholder opinion carried out by the Group's brokers and of analysts' reports and also by feedback from the Executive Directors who regularly meet with major shareholders.
Directors have access to the services and advice of the Company Secretary, and may take additional independent professional advice at the Group's expense in furtherance of their duties. The terms of reference of the Audit & Risk, Nomination and Remuneration Committees have been considered by their members with a view to ensuring they have available adequate resources to discharge their duties.
Details of the chairmen and membership of the Audit & Risk, Nomination and Remuneration Committees are set out in the table on page 20 together with details of attendance at meetings.
The Audit & Risk Committee, on behalf of the Board, is responsible for overseeing the Group's financial reporting, risk management and system of internal controls, including suitable monitoring procedures, which are designed to provide reasonable, but not absolute, assurance against material misstatement or loss. The Audit & Risk Committee is also responsible for keeping under review the scope, results and cost effectiveness of the audit and the independence of the external auditors. The Audit & Risk Committee assists the Board in its presentation of the Company's financial results and position through its review of the interim and full year financial statements before approval by the Board, focusing on compliance with accounting principles and policies, changes in accounting practice and major matters of judgement.
The Board has reviewed the effectiveness of the Group's system of internal control for the financial year and up to the date of this annual report and financial statements. The Board has carried out an evaluation of the major risks affecting the business and has a process in place within the business to control and monitor risks on an ongoing basis, in accordance with the principles established by the Turnbull Committee.
The internal control system is designed to manage, rather than eliminate, the risk of failure to achieve business objectives. The main elements of the Group's internal control systems (including financial, operational and compliance controls and risk management) which have operated throughout the year are as follows:
The Board considered the need to establish a separate internal audit function. It was decided that, under the direction of the Chief Operating Officer and Chief Financial Officer, the compliance department meets most of the objectives of an internal audit function. Consequently a separate internal audit function is not required.
Notices convening Annual General Meetings are despatched to shareholders at least twenty working days before the relevant meeting and contain separate resolutions on each issue, including a resolution to adopt the annual report and financial statements. At every Annual General Meeting, the Chairman of the Group and the chairmen of the Audit & Risk, Nomination and Remuneration Committees make themselves available to take questions from shareholders.
The Company has put arrangements in place with its registrars to ensure that all proxy votes are received and accurately accounted for. The level of proxies lodged on each resolution, including votes for, against and abstained, will be available on the Company's website or upon request from the Company Secretary after the Annual General Meeting.
The Directors are responsible for preparing the Annual Report, the Directors' Remuneration Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the group and parent company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Company and Group for that period. In preparing these financial statements, the Directors are required to:
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Each of the Directors, whose names and functions are listed on page 12 confirm that, to the best of their knowledge:
The financial statements may be published on the www.liontrust.co.uk website, which is maintained by the Company. The maintenance and integrity of the website is the responsibility of the Directors. The work carried out by the independent auditors does not involve consideration on the maintenance and integrity of this website and, according, the independent auditors accept no responsibility for any changes that have occurred to the financial statements since they were initially presented on the website. The financial statements are prepared in accordance with UK legislation, which may differ from legislation in other jurisdictions.
The Directors each confirm to the best of their knowledge that:
Having given consideration to the uncertainties and contingencies disclosed in the financial statements, the Directors have satisfied themselves that the Group has adequate resources to continue in operation for the foreseeable future and have therefore prepared the financial statements on a going concern basis.
The membership of the Audit & Risk Committee and the attendance record of Directors during the year are shown in the table on page 20. All members of the Audit & Risk Committee are independent Non-executive Directors. All members have recent and relevant financial experience; Alastair Barbour and Glyn Hirsch are chartered accountants.
The Audit & Risk Committee's principal duties are as follows:
The increased emphasis on risk matters is reflected in the name of the committee, which is now called the Audit & Risk Committee (previously known as the Audit Committee).
The terms of reference of the Audit & Risk Committee, which explain its role and the authority delegated to it by the Board of Directors, are published on the Company's website or are available upon request from the Company Secretary.
The Audit & Risk Committee met four times for scheduled meetings during the year. The Chief Operating Officer and Chief Financial Officer is a regular attendee, as are the Head of Finance, Head of Risk and the Head of Compliance & Financial Crime.
The Audit & Risk Committee has a formal programme of issues which it covers during the year. This programme is formulated by the Audit & Risk Committee Chairman and the Company Secretary and is designed to ensure that all matters that fall within the Audit & Risk Committee's remit are reviewed during the year. The Audit & Risk Committee has access to external independent advice at the Company's expense.
Principal issues considered during year were:
The Audit & Risk Committee meets regularly with the external auditors without management present. The partner of the Group's external auditors who is responsible for the audit is invited to attend the meetings at which the half yearly and annual reports are reviewed and the meeting at which the external audit plan is reviewed. Each year, the Audit & Risk Committee considers the performance of the external auditors prior to proposition of a resolution on their reappointment and remuneration at the Annual General Meeting.
During the year, PricewaterhouseCoopers LLP were, on a number of occasions, engaged as advisers. The range of non-audit services provided included tax compliance advice, employee and member incentivisation advice, restructuring advice, financial due diligence work and acting as the reporting accountant in relation to the acquisition of Walker Crips Asset Managers Limited. In order to maintain their independence, such appointments are only made when the Audit & Risk Committee is satisfied that there are no matters that would compromise the independence of the auditors or affect the performance of their statutory duties. PricewaterhouseCoopers LLP have also considered their position and have confirmed their independence to the Company in writing. The Group's external auditors are also required to provide an annual report to the Audit & Risk Committee detailing all non-audit services, including the level of fees charged, and to have their own internal processes to ensure that the firm, its partners and its staff are independent of the Group. Annually the Audit & Risk Committee reviews a formal letter provided by the external auditors confirming its independence and objectivity within the context of applicable regulatory requirements and professional standards.
The Board has accepted the Audit & Risk Committee's recommendation that a resolution be put to the 2012 Annual General Meeting for the reappointment of PricewaterhouseCoopers LLP as external auditors.
The membership of the Nominations Committee and the attendance record of Directors during the year are shown in the table on page 20. The Nominations Committee met three times in the year under review.
The Nominations Committee's principal duties are as follows:
The terms of reference of the Nominations Committee, which explains its role and the authority delegated to it by the Directors, are available on the Company's website or upon request from the Company Secretary. The terms and conditions of appointment of the Directors will be available for inspection at the Annual General Meeting.
The Nominations Committee reviewed the size and composition of the Board and considered the position of Glyn Hirsch as an independent Nonexecutive Director given that at the 2012 Annual General Meeting he would have served for thirteen years. The Nominations Committee recommended that Glyn Hirsch should be considered to be independent in view of his independence of character and judgement. The Board supported the Nominations Committee's recommendation.
The Nominations Committee approved the role for a new Executive Director to strengthen international distribution experience amongst the Board following the acquisition of Occam. Following the completion of the acquisition of Occam, Jonathan Hughes-Morgan joined the Board as an Executive Director.
During the financial year the Nominations Committee considered and approved a number of recommendations from the management committees of LIP and LFP for new SIF employees and members, including details of the controlled functions that they will perform, in particular in relation to the acquisitions of Occam and Walker Crips Asset Managers Limited.
The Nominations Committee received information and support from the Chief Operating Officer and Chief Financial Officer during the year. In order to enable the Nominations Committee to carry out its duties and responsibilities effectively the Nominations Committee has the right to appoint external recruitment consultants or external advisers to fill vacancies where it believes that to be appropriate.
Mark Jackson, Company Secretary. Registered Office: 2 Savoy Court, London WC2R 0EZ. 19 June 2012
The number of Board and Board committee meetings attended by Directors in the year ended 31 March 2012 was as follows:
| Board | Audit & Risk Committee |
Remuneration Committee |
Nominations Committee |
|
|---|---|---|---|---|
| Total number of meetings during the year |
17 | 4 | 4 | 3 |
| Adrian Collins | 15/17* | – | – | 3/3 |
| John Ions | 17/17 | – | – | 3/3 |
| Vinay Abrol | 17/17 | – | – | – |
| Jonathan Hughes | ||||
| Morgan (1) | 4/8 | – | – | – |
| Alastair Barbour (2) | 17/17 | 4/4* | 4/4 | 3/3 |
| Mike Bishop (3) | 16/17 | 4/4 | 4/4 | 3/3 |
| Glyn Hirsch | 12/17 | 2/4 | 2/4* | 1/3* |
* Chairman of the Board or Board Committee
(1) Joined 4 October 2011
(2) Joined 1 April 2011. Appointed Chairman of the Audit & Risk Committee on 1 April 2011.
(3) Joined 1 May 2011.
During the year, the Remuneration Committee comprised entirely independent Non-executive Directors. The membership of the Remuneration Committee and the attendance record of Directors during the year are shown in the table on page 20.
The Remuneration Committee is charged with determining remuneration policy for, and setting pay and other benefits of, the Executive Directors of the Company, its members and employees. All its recommendations are referred to the Board. Any Director, who has an interest in the matter which is the subject of a recommendation to the Board, abstains from the Board's vote in relation to that matter and takes no part in its deliberations.
The terms of reference of the Remuneration Committee, which explains its role and the authority delegated to it by the Directors, are available on the Company's website or upon request from the Company Secretary.
The key principles of the Remuneration Committee's policy are:-
In the financial year to 31 March 2012, the Remuneration Committee met four times and discussed, amongst other things, the subjects described below:
Review and approval of the fixed allocations and salaries for the Executive Directors (including the Chairman) for the financial year ending 31 March 2012;
Review and approval of the variable allocations and bonus for the Executive Directors (including the Executive Chairman) for the financial year ending 31 March 2012;
The Board itself determines the remuneration of the Non-executive Directors of the Company, each of whom abstains in respect of matters relating to his own position. The Board has imposed a remuneration freeze for the Non-executive Directors for the financial year ending 31 March 2013. This is the fourth consecutive year in which the remuneration of the Non-executive Directors has been frozen.
To ensure that the Company's rates of remuneration are competitive, the Remuneration Committee takes account of publicly available market data. In setting policy and making decisions, the Remuneration Committee gives full consideration to the provisions on the design of performance-related remuneration set out in Schedule A of the Code. The Remuneration Committee has imposed a base remuneration freeze for the Executive Directors for the financial year ending 31 March 2013. This will be the fourth consecutive year in which the base remuneration of the Executive Directors has been frozen.
The Remuneration Committee has determined that the Executive Directors will receive no annual bonus for this financial year. This is the third consecutive year in which the Executive Directors have received no annual bonus and shows a commitment to minimise any increase in fixed costs, reflects the turnaround strategy of the Group and the current economic environment.
The annual base remuneration for each of the Directors for the financial year ending 31 March 2013 is as follows:
| Director | Salary (for employees), Fixed Allocations (for members) or Fees (£) |
|---|---|
| Adrian Collins | £150,000 |
| John Ions | £250,000 |
| Vinay Abrol | £250,000 |
| Jonathan Hughes-Morgan | £150,000 |
| Alastair Barbour | £27,400 |
| Mike Bishop | £27,400 |
| Glyn Hirsch (1) | £nil |
Over the past year the Company has made significant progress in executing its business strategy. While recognising the rapidly changing environment from both a shareholder and regulatory perspective for executive pay in the UK, the Remuneration Committee is currently reviewing the remuneration arrangements to:-
The Remuneration Committee will provide further details of this review and changes, if any, to the current structure, in its next Remuneration Report.
The information presented in those tables marked 'auditable' is audited by the independent auditors, PricewaterhouseCoopers LLP, whose report is presented on pages 27 and 49.
| Salary (for employees), Fixed Allocations (for members) or Fees (£'000) |
Bonus (for employees) or Variable Allocations (for members) (£'000) |
Benefits in kind (1) (£'000) |
Total for year to 31 March 2012 (£'000) |
Total for year to 31 March 2011 (£'000) |
|
|---|---|---|---|---|---|
| Executive | |||||
| Adrian Collins | 150 | – | 3 | 153 | 159 |
| John Ions | 250 | – | 3 | 253 | 235 |
| Vinay Abrol | 250 | – | 3 | 253 | 297 |
| Jonathan Hughes-Morgan (2) | 73 | – | 1 | 74 | – |
| Nigel Legge (3) | – | – | – | – | 631 |
| Chris Edmeades (4) | – | – | – | – | 79 |
| Non executive | |||||
| Alastair Barbour | 27 | – | – | 27 | – |
| Mike Bishop | 25 | – | – | 25 | – |
| Glyn Hirsch (5) | 28 | – | – | 28 | 27 |
| Graham Hooper (6) | 6 | – | – | 6 | 33 |
| Jim Sanger (7) | – | – | – | – | 29 |
| 809 | – | 10 | 819 | 1,490 |
(1) Benefits in kind comprise private medical insurance
(2) Appointed 4 October 2011
(5) Includes consultancy fees of £8,500 in relation to advice to Liontrust International (Guernsey) Limited
The interests of the Directors and their families in the share capital of the Company at 31 March 2012 were as follows:
| Ordinary 1 pence shares held at 31 March 2012 |
Ordinary 1 pence shares held at 31 March 2011 |
|
|---|---|---|
| John Ions | 318,301 | 18,301 |
| Vinay Abrol | 675,576 | 590,756 |
| Jonathan Hughes-Morgan (1) | 750,000 | – |
| Alastair Barbour | 32,000 | – |
| Mike Bishop | 25,000 | – |
| Glyn Hirsch | 8,000 | 8,000 |
(1) Jonathan Hughes-Morgan is also connected to Occam Asset Management LLP, which is interested in a further 1,799,946 Ordinary shares
There were no changes to the Directors' interests between 1 April 2012 and 19 June 2012.
The ESIP (previously known as the Employee Share Ownership Plan) is an HMRC approved Share Incentive Plan, established in April 2001, allows all employees of the Group to contribute part of their salary on a monthly or annual basis to the ESIP (maximum monthly contribution is £125 and maximum annual contribution is £1,500). Contributions will be used to buy and hold shares in the Company (Partnership Shares) on their behalf. The Company awards participants in the ESIP shares in the Company (Matching Shares) on a 2:1 basis (i.e. two Matching Shares awarded for each one Partnership purchased by the participant).
The LSIP was approved by shareholders of the Company at a General Meeting in January 2011. Participation in LSIP is limited to the Executive Directors of the Company. The LSIP is a long term incentive plan the aim of which is to focus Executive Directors on executing the new business strategy by incentivising them and ensuring that their interests are closely aligned with those of shareholders.
LSIP operates in conjunction with the Liontrust Asset Management Employee Trust (the "Trust"). The Company will be able to fund the Trust to acquire shares in the market and/or to subscribe for shares at nominal value in order to satisfy awards granted under the LSIP. This may result in the Trust holding in excess of 5% of the issued ordinary shares of the Company. Any shares issued to the Trust in order to satisfy LSIP awards will be treated as counting towards the dilution limits that apply to the LSIP. For the avoidance of doubt, any shares acquired by the Trust in the market will not count towards these limits.
The shares used to satisfy LSIP awards will be sourced from a mixture of the following: (i) the use of the Trust's holding of ordinary shares of the Company or shares subscribed for by the Trust for that purpose, as detailed above; (ii) through the purchase in the market of ordinary shares of the Company from existing cash resources of the Company; and/or (iii) through the issue of new ordinary shares in the Company (although shareholders will not thereby be diluted by more than 10 per cent. in any 10 year period).
The LSIP awards will be nil-price options and will be subject to share price targets measured at the end of the three year period commencing on the date of the grant by reference to a 30 business day closing market average share price prior to that date.
The following table sets out the share price targets that will apply to the LSIP awards:
| Company's Share Price Target (at end of 3 year period from date of grant) |
Percentage vesting of LSIP Award at this Share Price Target* (%) |
|---|---|
| Below 125p | 0 |
| 125p | 25 |
| 150p | 75 |
| 175p | 100 |
* Straight line vesting between 125p and 150p and between 150p and 175p. Share price calculated as the 30 business day average of the closing share price prior to the end of the three year performance period.
The price paid for the options awarded under LSIP was £nil.
LIP was adopted by the Board in November 2009, participation in LIP is limited to the senior executives within the Group, but excluding any Director (including Executive Directors) of the Company.
LIP operates in conjunction with the Liontrust Asset Management Employee Trust (the "Trust") on the basis that options will be satisfied by the purchase of shares in the market by the Trust. This is to ensure that there is no dilution of shareholders' interests. This may result in the Trust holding in excess of 5% of the issued ordinary shares of the Company.
On the grant by the Company of an award under LIP, the Company may impose a performance target and any further condition on the exercise of the award that the Company determines to be appropriate. Where these targets have not been met by the end of the performance period all LIP awards will lapse.
The price paid for the options awarded under LIP was £nil. It is a condition of participation in the LIP that any options previously granted to a participant under the LEMIS are surrendered. There have been no changes to the terms and conditions of the options during the year.
LOP was adopted by the Board and approved by HMRC in December 2009. The LOP provides for the granting of options up to a market value limit of £30,000 to each individual employee on the date of grant.
Participation in LOP is open to all employees of the Group, but excluding any Director (including Executive Directors) of the Company.
The LOP operates in conjunction with the Liontrust Asset Management Employee Trust (the "Trust") on the basis that options will be satisfied by the purchase of shares in the market by the Trust. This is to ensure that there is no dilution of shareholders' interests. This may result in the Trust holding in excess of 5% of the issued ordinary shares of the Company.
The price paid for the options awarded under LOP was £nil. It is a condition of participation in the LOP that any options previously granted to a participant under the LEMIS are surrendered. There have been no changes to the terms and conditions of the options during the year.
As approved at the Annual General Meeting in July 2002 the Company introduced the LEMIS (closed to new entrants in 2011), the LEMIS is designed to reward incentive if challenging performance targets are met. The LEMIS operates in conjunction with the Liontrust Asset Management Employee Trust (the "Trust") on the basis that options will be satisfied by the issue of new ordinary shares and by the purchase of shares in the market by the Trust. This is to ensure that the dilution of shareholders' interests is limited. This may result in the Trust holding in excess of 5% of the issued ordinary shares of the Company.
The performance conditions attaching to the LEMIS on the initial grant of options is that over three financial years starting with the year of grant, there must be an increase in the diluted earnings per share (after removing exceptional items, the performance fees and costs and related tax charges) of the Group ("EPS") by a fixed percentage per annum that is more than the increase in the Retail Prices Index ("RPI") for the same period. In respect of each fixed percentage, part of the option will become exercisable. Consequently options will be exercisable in the following circumstances:
If EPS growth exceeds RPI by 3% then 50% of the option can be exercised. If EPS growth exceeds RPI by 4% then 75% of the option can be exercised. If EPS growth exceeds RPI by 5% then 100% of the option can be exercised.
In the case of EPS, measurement of growth will be made by comparing the EPS figure for the financial year ending immediately before the start of the performance period with the figure for the latest financial year in the performance period.
The price paid for the options awarded under the LEMIS was £nil (2011: £nil). There have been no changes to the terms and conditions of the options during the year.
Under the amended and restated LLP agreement dated 11 April 2011 made between Liontrust Investment Funds Limited ("LIF"), the several persons named therein and Liontrust Fund Partners LLP ("LFP"), as subsequently adhered to and the amended and restated LLP agreement dated 11 April 2011 made between Liontrust Investment Services Limited ("LIS"), the several persons named therein and Liontrust Investment Partners LLP ("LIP"), as subsequently adhered to (together the "LLP Agreements"), certain members of the LFP and LIP are entitled to a capital entitlement known as an "Incentive Capital Interest" pursuant to the LMIS, such Incentive Capital Interest being a reward by way of incentivisation the amount of which is determined by reference to the share price performance of Ordinary shares.
The LMIS is set out in the LLP Agreements. Certain individual members have been allocated Incentive Capital Interests, which entitle such individual member to a fixed amount on a winding-up.
The entitlement which the holder of an Incentive Capital Interest would have on a winding up of LFP or LIP is calculated on the basis of the application of a percentage (calculated in the manner described below) to the "Maximum Incentive Capital Interest" attributable to that Incentive Capital Interest.
The Maximum Incentive Capital Interest is a variable amount in Pounds Sterling equal to the number of Ordinary shares set out in his side letter multiplied by the price of Ordinary shares from time to time (by reference to a 30 day market average price).
The actual "value" of the Incentive Capital Interest is then calculated by multiplying the Maximum Incentive Capital Interest by a formula set out in the LLP Agreements. The formula operates by reference to share price targets (x, y and z, as set out in the relevant individual member's side letter) of Ordinary shares, which are calculated at the end of the 3 year period from the date of grant of the Incentive Capital Interest (the "Test Date") by reference to a 30 day market average price, giving (depending on the actual average price at the time) the percentage stated in column 2 of the table below to be multiplied by the Maximum Incentive Capital Interest (the formula operating so as to calculate a straight-line "value" of the Incentive Capital Interest between xp and yp and yp and zp).
| Column (1) Company share price target |
Column (2) Percentage "vesting" of the Maximum Incentive Capital Interest at this share price target (%) |
|---|---|
| Below xp | 0 |
| Xp | 25 |
| Yp | 75 |
| Zp | 100 |
For Incentive Capital Interests awarded in the financial year; x equals 125, y equals 150 and z equals 175.
In order to enable a holder of Incentive Capital Interest to realise any value comprised therein, the LLP Agreements include "put" and "call" options pursuant to which LIS and LIF (as applicable) is entitled to require an Individual Member to sell (the "Call Option"), and the Individual Member is entitled to require LIS and LIF (as applicable) to purchase (the "Put Option", together with the Call Option, the "Option"), such Incentive Capital Interests for a cash amount equal to the "value" (as described above) thereof (the "Option Consideration"). Subject to earlier lapse, the Option is capable of exercise in the seven year period following the Test Date and will thereafter lapse. In addition, in relation to the Option, LIS and LIF would be entitled, in their absolute and sole discretion, to nominate another person to perform its obligations thereunder (a "Nominated Person"). LIS and LIF or the Nominated Person (as the case may be) further has the option to elect to satisfy the Option Consideration in whole or in part by the transfer and/or allotment and issue at the then prevailing price (comprising a 30 day market average price) of Ordinary shares and shall, in respect of any of the Option Consideration satisfied in cash, have the further option to require the relevant holder of Incentive Capital Interests to apply some or all of that cash in the subscription for, and/or the purchase of, Ordinary shares at the then prevailing market price (comprising a 30 day market average price).
LIS and LIF or the Nominated Person (as the case may be) will determine in its absolute discretion how to satisfy the Option Consideration in whole or in part, taking into account the interests of shareholders and the costs to the Company. It is the current intention to satisfy the Option Consideration by a mixture of shares already held in the Company, additional market purchased shares and/or treasury shares.
In certain circumstances, the Test Date will be earlier than the third anniversary of the date of grant of the Incentive Capital Interests, namely the date prior to such anniversary that is the earlier of: (i) the effective date of a change of control of the Company; and (ii) the date on which a holder of an Incentive Capital Interest becomes as "Good Leaver" (which, for these purposes, means when a member retires other than: (a) in the circumstances where he resigns as a member pursuant to clause 19; or (b) in circumstances where he is expelled as a member pursuant to clause 20.1, in each case of the LLP Agreements. In these circumstances, the period during which the Option will be capable of exercise will also be accelerated.
The Incentive Capital Interests and the Put Option will also lapse if an individual member retires in circumstances where he is not a "Good Leaver".
The options granted to the Executive Directors were as follows:
| Director | 1 April 2011 |
Options granted |
Options exercised |
Options Lapsed |
31 March 2012 |
Exercise price (pence) |
Issue date | Scheme |
|---|---|---|---|---|---|---|---|---|
| Adrian Collins | 1,000,000 | – | – | – | 1,000,000 | 1.0 | 1 February 2011 | LSIP |
| John Ions | 200,000 | – | – | – | 200,000 | 1.0 | 10 February 2010 | LIP |
| 1,800,000 | – | – | – | 1,800,000 | 1.0 | 1 February 2011 | LSIP | |
| Vinay Abrol | 200,000 | – | – | – | 200,000 | 1.0 | 1 February 2011 | LSIP |
Key:
LIP – Liontrust Incentive Plan, exercisable between 1 April 2012 and 31 March 2019.
LSIP – Liontrust Senior Incentive Plan, exercisable between 1 February 2014 and 31 January 2021.
The closing quotation of the Company's shares at the end of the year was 121½ pence and the range of market prices during the year was between 57 pence and 121½ pence.
There are no pension contributions currently being made by the Company for the Executive Directors as these have been suspended by the Board. If and when these are re-instated the pension contributions normally equate to 15 per cent. of an Executive Directors' base remuneration.
No contributions in respect of pension entitlements are made by the Group.
The Directors' employment contracts or letters of appointment or limited liability partnership membership agreements/side letters are as follows:
| Director | Date of contract | Notice period |
|---|---|---|
| Executive | ||
| Adrian Collins | 31 December 2010 | 6 months |
| John Ions | 8 July 2010 | 6 months |
| Vinay Abrol | 8 July 2010 | 12 months |
| Jonathan Hughes-Morgan (1) | 30 September 2011 | 6 months |
| Non-executive | ||
| Alastair Barbour (2) | 1 April 2011 | 3 months |
| Mike Bishop (3) | 1 May 2011 | 3 months |
| Glyn Hirsch | 13 December 2011 | 3 months |
(1) Appointed 4 October 2011
(2) Appointed 1 April 2011
(3) Appointed 1 May 2011
None of the Directors' employment contracts or letters of appointment or limited liability partnership membership agreements/side letters contains provisions for compensation for loss of office.
The graph below illustrates the performance of the Group's Share Price over the period 07.05.10 to 31.03.12, compared to two indices:
The indices were chosen as follows:
The Remuneration Committee believes that the Group has complied with Schedule B of the Code and has given full consideration to Schedule A of the Code in formulating the remuneration packages of the Executive Directors and other senior members of the Group.
The Chairman of the Remuneration Committee will attend the Annual General Meeting and will be available to answer Shareholders' questions regarding remuneration.
The terms of reference of the Remuneration Committee, which explains its role and the authority delegated to it by the Board, are available upon request from the Company Secretary.
Chairman of the Remuneration Committee 19 June 2012
We have audited the group financial statements of Liontrust Asset Management PLC for the year ended 31 March 2012 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Cash Flow Statement, the Consolidated Statement of Changes in Equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
As explained more fully in the Directors' Responsibilities Statement set out on page 18, the Directors are responsible for the preparation of the group financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the group financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for auditors.
This report, including the opinions, has been prepared for and only for the company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
In our opinion the group financial statements:
In our opinion:
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
We have reported separately on the parent company financial statements of Liontrust Asset Management PLC for the year ended 31 March 2012 and on the information in the Directors' Remuneration Report that is described as having been audited.
for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Edinburgh 19 June 2012
for the year ended 31 March 2012
| Year | Year | ||
|---|---|---|---|
| ended 31-Mar-12 |
ended 31-Mar-11 |
||
| Notes | £'000 | £'000 | |
| Continuing Operations | |||
| Revenue | 4 | 13,714 | 8,929 |
| Cost of sales | 4 | (76) | (80) |
| Gross profit | 13,638 | 8,849 | |
| Realised gain on sale of financial assets | 212 | 701 | |
| Administration expenses | 5 | (15,445) | (14,672) |
| Operating loss from Continuing Operations | 6 | (1,595) | (5,122) |
| Interest receivable | 8 | 22 | 10 |
| Loss before tax from Continuing Operations | (1,573) | (5,112) | |
| Taxation | 9 | (250) | 544 |
| Loss for the year from Continuing Operations | (1,823) | (4,568) | |
| Discontinued Operations | |||
| Realised gain on sale of credit business | 10 | 1,569 | – |
| Profit after tax for the year from Discontinued Operations (attributable to equity holders of the Company) | 10 | 17 | 16 |
| Loss for the year Other comprehensive income: |
(237) | (4,552) | |
| Gain on financial assets net of tax | 61 | 445 | |
| Realised gain taken to the statement of comprehensive income | (212) | (701) | |
| Exchange differences on translating foreign operations | – | 7 | |
| Other Comprehensive income for the year, net of tax | (151) | (249) | |
| Total comprehensive income | (388) | (4,801) | |
| Continuing Operations | Pence | Pence | |
| Basic earnings per share | 11 | (5.65) | (14.74) |
| Diluted earnings per share | 11 | (5.62) | (13.70) |
| Total | |||
| Basic earnings per share | 11 | (0.73) | (14.69) |
| Diluted earnings per share | 11 | (0.73) | (13.65) |
The notes on pages 32 to 60 form an integral part of these consolidated financial statements.
as at 31 March 2012
| Notes | 31-Mar-12 £'000 |
31-Mar-11 £'000 |
|---|---|---|
| Assets | ||
| Non current assets | ||
| Intangible assets 12 |
1,100 | 600 |
| Property, plant and equipment 13 |
121 | 123 |
| Deferred tax assets 14 |
1,638 | 2,160 |
| Total Non Current assets | 2,859 | 2,883 |
| Current assets | ||
| Trade and other receivables 15 |
18,462 | 10,205 |
| Financial assets 16 |
295 | 8,530 |
| Cash and cash equivalents | 12,388 | 4,157 |
| Total Current assets | 31,145 | 22,892 |
| Liabilities | ||
| Current liabilities | ||
| Deferred tax liabilities 14 |
– | (57) |
| Trade and other payables 18 |
(16,932) | (10,277) |
| Accruals 19 |
(233) | (119) |
| Total Current liabilities | (17,165) | (10,453) |
| Net current assets Net assets |
13,980 16,839 |
12,439 15,322 |
| Shareholders' equity attributable to owners of the parent | ||
| Ordinary shares 20 |
371 | 353 |
| Share premium | 11,552 | 10,272 |
| Capital redemption reserve | 15 | 15 |
| Revaluation reserve | – | 151 |
| Retained earnings | 17,073 | 16,703 |
| Own shares held 21 |
(12,172) | (12,172) |
| Total equity | 16,839 | 15,322 |
Approved and authorised for issue by the Board of Directors on 19 June 2012 and signed on its behalf by
V.K. Abrol, Chief Operating Officer and Chief Financial Officer.
The notes on pages 32 to 60 form an integral part of these consolidated financial statements.
Company Number 2954692
for the year ended 31 March 2012
| Year | Year | |
|---|---|---|
| ended 31-Mar-12 |
ended 31-Mar-11 |
|
| Notes | £'000 | £'000 |
| Cash flows from operating activities | ||
| Cash inflow from operations | 14,351 | 11,447 |
| Cash outflow from operations | (15,914) | (18,002) |
| Cash outflow from changes in unit trust receivables and payables | (754) | (601) |
| Net cash used in operations | (2,317) | (7,156) |
| Interest received | 22 | 10 |
| Tax received | 1,035 | 263 |
| Net cash used in operating activities | (1,260) | (6,883) |
| Cash flows from investing activities | ||
| Purchase of property and equipment | (41) | (50) |
| Sale of Seeding investments | 7,966 | 703 |
| Purchase of intangible asset 12 |
(2,166) | – |
| Sale of Credit business (net of expenses) 10 |
2,434 | – |
| Net cash generated from investing activities | 8,193 | 653 |
| Cash flows from financing activities | ||
| Purchase of minority interest shares | – | (2,654) |
| Issue of new shares | 1,298 | 1,326 |
| Net cash from/(used in) financing activities | 1,298 | (1,328) |
| Net increase/(decrease) in cash and cash equivalents | 8,231 | (7,558) |
| Effect of exchange rate changes | – | (7) |
| Opening cash and cash equivalents* | 4,157 | 11,722 |
| Closing cash and cash equivalents | 12,388 | 4,157 |
* Cash and cash equivalents consist only of cash balances.
The notes on pages 32 to 60 form an integral part of these consolidated financial statements.
for the year ended 31 March 2012
| Share capital £'000 |
Share premium £'000 |
Capital redemption £'000 |
Revaluation £'000 |
Retained earnings £'000 |
Own shares held £'000 |
Total Equity £'000 |
|
|---|---|---|---|---|---|---|---|
| Balance at 1 April 2011 brought forward | 353 | 10,272 | 15 | 151 | 16,703 | (12,172) | 15,322 |
| Loss for the year | – | – | – | – | (237) | – | (237) |
| Net gains on available-for-sale financial assets net of tax | – | – | – | 61 | – | – | 61 |
| Amounts recycled through the Consolidated Statement of | |||||||
| Comprehensive Income | – | – | – | (212) | – | – | (212) |
| Total comprehensive income for the year | – | – | – | (151) | (237) | – | (388) |
| Shares issued | 18 | 1,280 | – | – | – | – | 1,298 |
| Equity share options issued | – | – | – | – | 607 | – | 607 |
| Balance at 31 March 2012 | 371 | 11,552 | 15 | – | 17,073 | (12,172) | 16,839 |
for the year ended 31 March 2011
| Share capital £'000 |
Share premium £'000 |
Capital redemption £'000 |
Revaluation £'000 |
Retained earnings £'000 |
Own shares held £'000 |
Total Equity £'000 |
|
|---|---|---|---|---|---|---|---|
| Balance at 1 April 2010 brought forward | 337 | 8,962 | 15 | 407 | 23,881 | (12,172) | 21,430 |
| Loss for the year | – | – | – | – | (4,552) | – | (4,552) |
| Net gains on available-for-sale financial assets net of tax | – | – | – | 445 | – | – | 445 |
| Amounts recycled through the Consolidated Statement of | |||||||
| Comprehensive Income | – | – | – | (701) | – | – | (701) |
| Gain on foreign exchange | – | – | – | – | 7 | – | 7 |
| Total comprehensive income for the year | – | – | – | (256) | (4,545) | – | (4,801) |
| Acquisition of minority interest shares | – | – | – | – | (2,654) | – | (2,654) |
| Shares issued | 16 | 1,310 | – | – | – | – | 1,326 |
| Equity share options issued | – | – | – | – | 21 | – | 21 |
| Balance at 31 March 2011 | 353 | 10,272 | 15 | 151 | 16,703 | (12,172) | 15,322 |
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), which comprise standards and interpretations issued by either the International Accounting Standards Board or the IFRS Interpretations Committee or their predecessors as adopted by the European Commission, and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial information presented within these financial statements has been prepared on the going concern basis under the historical cost convention (except for the measurement of financial assets at fair value through profit and loss and financial assets available-for-sale which are held at their fair value) and in accordance with applicable accounting standards.
The preparation of financial statements in conformity with generally accepted accounting principles requires the Directors of the Company to make judgements and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingencies at the date of the financial information and the reported income and expense during the reporting periods. Although these judgements and assumptions are based on the Directors' best knowledge of the amount, events or actions, actual results may differ from these estimates. The accounting policies set out below have been used to prepare the financial information. All accounting policies have been consistently applied.
The financial information has been prepared based on the IFRS standards effective as at 31 March 2012.
The Group did not implement the requirements of any Standards which were issued during the year and which were not required to be implemented at the year-end date. No Standards and Interpretations endorsed by the EU that had an effect on the Group became effective during the year. Standards and Interpretations relevant to the Group that had been issued but not yet endorsed by the EU or adopted at the year end were:
| IFRS 9 | Financial Instruments: Classification |
|---|---|
| IFRS 10 | Consolidated Financial Statements |
| IFRS 13 | Fair Value Measurement |
| IFRS 19 (Amended) | Employee Benefits |
These revised standards when endorsed are unlikely to have a material impact on the Group's disclosures.
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 do not anticipate that the adoption of any of these new or revised Standards and Interpretations in future periods will have a material impact on the financial statements of the Group.
Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. The Group also assesses existence of control where it does not have more than 50% of the voting power but is able to govern the financial and operating policies by virtue of de-facto control. De-facto control may arise in circumstances where the size of the Group's voting rights relative to the size and dispersion of holdings of other shareholders give the Group the power to govern the financial and operating policies.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.
Inter-company transactions, balances, income and expenses on transactions between Group entities are eliminated. Profits and losses resulting from intercompany transactions that are recognised in assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
The Group provides additional disclosure in the form of an Adjusted profit/loss note (note 7, page 40) in order to provide shareholders with a clearer indication of the profitability of the Group. The Adjusted profit or loss is the total of Group profit or loss excluding the following items:
Non-cash items which include depreciation, intangible asset amortisation and IFRS2 related expenses; and
Non-recurring items which include cost reduction expenses, restructuring costs, acquisition related costs, integration costs, share incentivisation expenses, severance compensation and Financial Services Compensation Scheme Interim Levy.
The Group presents a reconciliation to the Profit or Loss for the year per the statutory financial information.
Estimates and judgements used in preparing the financial statements are periodically evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable. The resulting accounting estimates will seldom equal the related actual results. The estimates and assumptions that have a significant effect on the carrying amounts of assets and liabilities are discussed below.
Valuation and impairment of financial assets
Details of the valuation policy for financial assets can be found in note 1j) below.
Details of the valuation policy for other assets can be found in notes 1g), 1h) and 1i) below.
The Group is subject to income taxes in a number of jurisdictions. Judgement is required in determining the total provision for income taxes. There are transactions and calculations for which the ultimate tax determination may be uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.
A discontinued operation is a component of an entity that has been disposed of and represents an identifiable significant line of business for the Group. Any gain or loss from disposal of a business, together with the results of these operations until the date of disposal, is reported separately as discontinued operations. The financial information of discontinued operations is excluded from the respective captions in the Consolidated financial statements and related notes for all years presented.
Property, plant and equipment are stated at historic purchase cost less accumulated depreciation. The cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use.
Leasehold improvements are included at cost and are depreciated on a straight line basis over the lower of the estimated useful life and the remaining lease term.
Office equipment is depreciated on a straight line basis over the estimated useful life of the asset, which is between three and ten years.
Computer equipment is depreciated on a straight line basis over the estimated useful life of the asset which is three years.
At each reporting date management reviews the assets' residual values and useful lives, and will make adjustments if required.
Trade and other receivables include prepayments as well as amounts the Group is due to receive from third parties in the normal course of business. These include fees as well as settlement accounts for transactions undertaken. These receivables are normally settled by receipt of cash. Trade and other receivables are stated after deducting provisions for bad and doubtful debts. Prepayments arise where the Group pays cash in advance for services. As the service is provided, the prepayment is reduced and the operating expense recognised in the income statement.
Trade and other payables (excluding deferred income) represent amounts the Group is due to pay to third parties in the normal course of business. These include expense accruals as well as settlement accounts (amounts due to be paid for transactions undertaken). Trade creditors are costs that have been billed, accruals represent costs, including remuneration, that are not yet billed or due for payment.
The costs of acquiring intangible assets such as fund management contracts are capitalised where it is probable that future economic benefits that are attributable to the assets will flow to the Group and the cost of the assets can be measured reliably.
The fund management contracts are recorded initially at fair value and recorded in the financial statements as an intangible asset they are then amortised over their useful lives on a straight-line basis over 5 years. The assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset exceeds its recoverable amount.
The Group classifies its financial assets in the following categories: at fair value through profit and loss, available-for-sale and receivables
Financial assets are classified as available-for-sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. After initial recognition, investments which are classified as available-for-sale are measured at fair value. Gains or losses, together with transaction costs, on availablefor-sale investments are recognised as a separate component of equity until the investment is sold, collected or otherwise disposed of, or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in 'other comprehensive income' is included within 'Realised gain/(loss) on sale of financial assets' in the statement of comprehensive income. Assets categorised as available-for-sale are reviewed at the end of each reporting period for impairment.
The Group holds the following assets at fair value through profit and loss:
For the UK Authorised unit trust and the sub-funds of the Liontrust Guernsey Fund Limited (a Guernsey domiciled Open ended investment company), the units and shares held in the 'manager's box' are to ease the calculation of daily creations and cancellations of units and shares. These box positions are not held to create speculative proprietary positions but are managed in accordance with specified criteria and authorisation limits. The units and shares in the 'manager's box' are accounted for on a trade date basis. These units and shares are valued on a bid price basis.
The Group holds the following assets as available-for-sale:
The Group's assets held as available-for-sale represent shares in the Liontrust European Absolute Alpha Fund and Liontrust Emerging Markets Absolute Return Fund (both sub-funds of Liontrust Umbrella Fund Plc) and are valued on a bid price basis.
Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets. The Group's receivables comprise trade and other receivables and cash and cash equivalents in the balance sheet.
The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired.
Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. Under IFRS cash and cash equivalents are included in the cash flow statement.
Own shares held by the Liontrust Asset Management Employee Trust are valued at cost and are shown as a deduction from the Group's shareholders' equity. No gains or losses are recognised in the income statement.
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.
Income and expenses are accounted for on an accruals basis when they become receivable or payable. Asset management fees are accrued over the period for which the service is provided.
Front end fees received and commissions paid on the sales of units in unitised funds are amortised over the estimated life of the unit.
Performance fees are recognised in the period in which they become due and collectable. Any portion of performance fees that are not due and collectable, and whose future entitlement is not certain, is not recognised but noted as a contingent asset.
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for, if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
The Group operates defined contribution schemes for its employees. The assets are invested with insurance companies and are held separately from the Group. The costs of the pension scheme are recognised in the Consolidated Statement of Comprehensive Income in the period in which they are incurred. The Group has no further payment obligations once the contributions have been paid.
The Group operates a number of equity-settled, share-based compensation plans, under which the entity receives services from employees as consideration for equity instruments (options) of the group. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense (and credited to equity reserves) over the vesting period. The total amount to be expensed is determined at the date of grant by reference to the fair value of the options granted. A number of models have been used to calculate the fair value as follows:
A binomial model is used with the following assumptions having been made
The fair value for each options is spread over the vesting period which is three years;
The expected life of options issued under LOP is 6.5 years.
The expected volatility has been calculated using historical daily data over a term commensurate with the expected life of the option and is 39.9% The risk-free interest rate has been based on the implied yield of zero-coupon government bonds (UK strips) with a remaining term equal to the expected term and is 3.37%
– Liontrust Incentive Plan ('LIP') with no performance conditions attached
A discounted face value model has been used for valuation.
The fair value for each options is spread over the vesting period which is 2 years;
The expected life of options issued under LIP is between 2.14 and 2.29 years
– Liontrust Incentive Plan ('LIP') with performance conditions
A Monte Carlo simulation model is used with the following assumptions having been made
The fair value for each options is spread over the vesting period which is 3 years;
The expected life of options issued under this LIP scheme is 2.14 years
The expected volatility has been calculated using historical daily data over a term commensurate with the expected life of the option and is 58.1% The risk-free interest rate has been based on the implied yield of zero-coupon government bonds (UK strips) with a remaining term equal to the expected term and is 1.27%
– Liontrust Senior Incentive Plan ('LSIP') with performance conditions
A Monte Carlo simulation model is used with the following assumptions having been made
The fair value for each options is spread over the vesting period which is 3 years;
The expected life of options issued under this LSIP scheme is 10 years
The expected volatility has been calculated using historical daily data over a term commensurate with the expected life of the option and is 39% The risk-free interest rate has been based on the implied yield of zero-coupon government bonds (UK strips) with a remaining term equal to the expected term and is 1.82%
Equity dividends to the shareholders of the Company are recognised as a liability in the period during which they are declared and approved.
Under IAS 19, all accumulating employee compensated absences that are unused at the balance sheet date are recognised as a liability. The Group's entitlement period runs for the financial year and any employees with unused holiday allowance at the period end have no contractual entitlement to this.
Where the Group has investments in funds over which it is able to exert significant influence but not control, the Group has applied the scope of exclusion within IAS 28, Investment in Associates, for unit trusts and similar entities and has accounted for such assets at fair value through profit and loss or assets availablefor-sale.
Items in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (The 'functional currency'). The consolidated financial statements are presented in Sterling ('£') which is the Company's functional and presentation currency.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.
The Group's activities expose it to a variety of financial risks: market risk (including price risk, cash flow interest rate risk and foreign exchange risk), credit risk and liquidity risk. The Group's overall risk management programme understands the unpredictable nature of financial markets and seeks to minimise any potential adverse effects on the Group's financial performance. The Group uses a number of analytical tools to measure the state of the business. The table on page 9 in the Business Review identifies some of these measures.
The Group is exposed to equity securities price risk because of investments held by the Group and classified on the consolidated balance sheet as current financial assets (either held at fair value through profit and loss or held as available-for-sale).
The Group holds the following types of investment as assets held at fair value through profit and loss or assets held as available-for-sale:
For UK Authorised unit trusts and the sub-funds of the Liontrust Guernsey Fund Limited (a Guernsey domiciled Open ended investment company), the units and shares held in the 'manager's box' are to ease the calculation of daily creations and cancellations of units and shares. These box positions are not held to create speculative proprietary positions but are managed in accordance with specified criteria and authorisation limits. At the end of each day's business the manager's box for each fund is reviewed. If there is a negative box position then units or shares are created to bring the box level positive. Three control levels of the manager's box exist for each fund and each level is required to be signed off by progressively more senior staff. There are clearly defined maximum limits, over which manager's box levels cannot exceed.
The units and shares in the 'manager's box' are accounted for on a trade date basis. These units are valued on a bid price basis and held at fair value through profit and loss.
The investment in the sub funds of Liontrust Umbrella Fund Plc, (a Dublin domiciled Open ended investment company) have been undertaken as an investment to aid incorporation and will be redeemed when the funds grow in size. The Group has a regular review process for the investment which identifies specific criteria to ensure that the investment is within agreed limits.
Management consider, based on historic information, that a sensistivity rate of 10% is appropriate. Based on the holdings in the Liontrust Umbrella Fund at the balance sheet date a price movement of 10% would result in a movement in the value of the investment of £10,000 (2011: £n/a).
The Group monitors its investments with respect to its regulatory capital requirements and reviews its investments' values with respect to overall Group capital on a monthly basis.
The Group holds cash on deposit. The interest on these balances is based on floating rates and fixed rates. The Group monitors its exposure to interest rate movements and may decide to adjust the balance between deposits on fixed or floating interest rates, or adjust the level of deposits. Management consider that given current interest rate levels a sensitivity rate of 1% is appropriate. Following a review of sensitivity based on average cash holdings during the year a 1% increase or decrease in the interest rate will cause a £108,000 increase or a decrease to nil in interest receivable (2011: £143,000).
The Group is exposed to foreign exchange risk in the following areas: Investments denominated in Swedish Kroner, US Dollars and Swiss Francs and income receivable in Euro and US Dollars.
In calculating the sensitivity analysis below it has been assumed that expenses/income will remain stable in their relative currencies year on year.
Management consider that a sensitivity rate of 10% is appropriate given the current levele of volatility in the world currency markets. In respect of investments denominated in foreign currencies a 10% movement in the UK Sterling vs. the relevant exchange rate would lead to an exchange gain or loss as follows:
Sterling vs. Swedish Kroner - a movement of 10% would lead to a movement of £5,000
Sterling vs. US Dollar - a movement of 10% would lead to a movement of less than £1,000
Sterling vs. Swiss Franc - a movement of 10% would lead to a movement of £1,000
In respect of Income receivable in Euro a 10% movement in the exchange rate would result in a movement of £48,000 (2011: £46,000) in the income statement.
In respect of Income receivable in US Dollar a 10% movement in the exchange rate would result in a movement of £30,000 (2011: £23,000) in the income statement.
Credit risk is managed at a Group level. Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to clients, including outstanding receivables and committed transactions.
For banks and financial institutions only independently rated parties with a minimum rating of 'A' are used and their ratings are regularly monitored and are reviewed at a board level on a monthly basis.
For receivables the Group takes into account the credit quality of the client and credit positions are monitored. The Group has three main types of receivables: management and performance fees, settlement due from investors in its funds and from the funds themselves for unit/share liquidations. For management and performance fee receivables, the Group proactively manages the invoicing process to ensure that invoices are sent out on a timely basis and has procedures in place to chase for payment at pre-determined times after the despatch of the invoice to ensure timely settlement. For settlement due from the fund for liquidations, the settlement of these types of receivables are governed by regulation and are monitored on an exception basis. For receivables due from investors, the Group has rigorous procedures to chase investors by phone/letter to ensure that settlement is received on a timely basis. In all cases, detailed escalation procedures are in place to ensure that senior management are aware of any problems at an early stage.
During the year there have been no losses due to non-payment of receivables and the Group does not expect any losses from the credit counterparties as held at the balance sheet date.
Prudent liquidity risk management required the maintenance of sufficient cash and marketable securities. The Group monitors rolling forecasts of the Group's liquidity reserves (comprising readily realisable investments and cash and cash equivalents) on the basis of expected cash flow.
The Group has analysed its financial liabilities into maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table below are the contractual undiscounted cash flows.
| As at 31 March 2012 | Within 3 months £'000 |
Between 3 months and one year £'000 |
Over one year £'000 |
|---|---|---|---|
| Payables | 16,932 | – | – |
| As at 31 March 2011 | Within 3 months £'000 |
Between 3 months and one year £'000 |
Over one year £'000 |
| Payables | 10,277 | – | – |
The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain and optimal structure to reduce the cost of capital.
Recognised regulatory bodies, such as the Financial Service Authority in the UK, oversee the activities of a number of the Group's operating subsidiaries and impose minimum capital requirements on the subsidiaries. The Group's policy is that its subsidiaries should have sufficient capital to meet regulatory requirements, keep an appropriate standing with counterparties and meet working capital requirements.
The Group is regulated by the Financial Services Authority as a UK consolidation group. The Pillar 1 minimum capital requirement is £ 1.9 million (2011: £7.3 million).
The Internal Capital Adequacy Assessment Process carried out in 2012 under Pillar 2 of the Capital Requirements Directive concluded that £2.6 million capital should be retained. Management consider capital to comprise of cash and net assets. As at 31 March 2012 the Group has cash and net assets of £14.2 million (2011: £12.6 million).
Management reviews the Group's assets on a monthly basis and will ensure that operating capital is maintained at the levels required. In order to maintain or adjust the capital structure the Group may adjust the amounts of dividends paid to shareholders, return capital to shareholders, issue new shares, buy back shares or sell financial assets which will increase cash and reduce capital requirements.
During the period the Group complied with its capital requirements.
The Group operates only in one business segment – Investment Management.
Management 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.
| Year ended 31-Mar-12 £'000 |
Year ended 31-Mar-11 £'000 |
|
|---|---|---|
| United Kingdom | 11,052 | 7,000 |
| Europe (ex UK) | 970 | 849 |
| Guernsey | 465 | 318 |
| Cayman Islands | 1,001 | 711 |
| USA | 226 | 51 |
| 13,714 | 8,929 |
The only non UK domiciled non-current assets comprise the Group's intangible asset which is domiciled in Guernsey
During the year ended 31 March 2012 the Group had one customer contributing more than 10% of total revenue (2011: no single customer).
Revenue from earnings includes:
Investment management, performance and administration fees; the net value of sales and repurchases of units in unit trusts and shares in open-ended investment companies (net of discounts); the net value of liquidations and creations of units in unit trusts and shares in open-ended investment companies; and foreign currency gains and losses.
The cost of sales includes:
Sales commission paid or payable and external investment advisory fees paid or payable.
Discontinued operations
Revenue relating to discontinued operations is detailed in note 10 - Discontinued operations.
| Year ended 31-Mar-12 £'000 |
Year ended 31-Mar-11 £'000 |
|
|---|---|---|
| Employee related expenses | ||
| Director and employee costs (1) | 4,533 | 4,750 |
| Share incentivisation expense | 621 | 433 |
| Severance compensation | 147 | 1,458 |
| 5,301 | 6,641 | |
| Non employee related expenses | ||
| Members drawings charged as an expense (1) | 3,458 | 1,691 |
| Global equities team closure costs | – | 284 |
| Acquisition related expenses | 690 | – |
| Cost reduction and restructuring program | 515 | 892 |
| Depreciation and Intangible asset amortisation | 1,109 | 238 |
| Financial Services Compensation Scheme Levy | – | 414 |
| Other administration expenses (2) | 4,372 | 4,512 |
| 15,445 | 14,672 |
| Year ended 31–Mar–12 £'000 |
Year ended 31–Mar–11 £'000 |
|
|---|---|---|
| Share incentivisation expense | ||
| – Share option expense | 607 | 21 |
| – Share incentive plan expense | 4 | 151 |
| – Share option related expenses | 10 | 261 |
| 621 | 433 |
(1) Full details of the Directors emoluments can be found in the Directors Remuneration Report on page 22
(2) Other administration expenses for Discontinued Operations can be found in note 10 - Discontinued operations
The average number of members and employees of the Group, excluding Non-executive Directors, was 46 (2011: 40). All employees are involved in the investment management business of the Group. The costs incurred in respect of the Directors, members and employees was:
| Member and employee expenses for continuing operations* | |||||
|---|---|---|---|---|---|
| Year ended 31-Mar-12 | |||||
| Employees | Members | ||||
| Average number of members |
Wages and | Social security | Total employee | Members drawings charged as an |
|
| and employees during the year |
salaries £'000 |
costs £'000 |
expense £'000 |
expense £'000 |
|
| General management | 2 | 205 | 22 | 227 | 261 |
| Fund management | 7 | 2,587 | 353 | 2,940 | 1,124 |
| Fund management support | 7 | 282 | 32 | 314 | 263 |
| Finance, Operations and IT | 11 | 394 | 42 | 436 | 637 |
| Risk management and Compliance | 3 | 45 | 5 | 50 | 217 |
| Sales and Marketing | 16 | 431 | 49 | 480 | 956 |
| Non-executive Directors | 3 | 78 | 8 | 86 | - |
| 49 | 4,022 | 511 | 4,533 | 3,458 |
| Member and employee expenses for continuing operations* | |||||||
|---|---|---|---|---|---|---|---|
| Year ended 31-Mar-11 | |||||||
| Employees | |||||||
| Average number of employees during the year |
Wages and salaries £'000 |
Social security costs £'000 |
Total employee expense £'000 |
Members drawings charged as an expense £'000 |
|||
| General management | 1 | 272 | 13 | 285 | – | ||
| Fund management | 6 | 2,041 | 244 | 2,285 | 382 | ||
| Fund management support | 6 | 237 | 24 | 261 | 179 | ||
| Finance, Operations and IT | 12 | 627 | 68 | 695 | 428 | ||
| Risk management and Compliance | 2 | 73 | 8 | 81 | 111 | ||
| Sales and Marketing | 13 | 938 | 102 | 1,040 | 591 | ||
| Non-executive Directors | 4 | 93 | 10 | 103 | – | ||
| 44 | 4,281 | 469 | 4,750 | 1,691 |
* member and employee expenses for Discontinued Operations are detailed in note 10 - Discontinued operations.
| Year ended 31-Mar-12 £'000 |
Year ended 31-Mar-11 £'000 |
|
|---|---|---|
| The following items have been included in arriving at operating loss: | ||
| Foreign exchange gains/(losses) | (80) | (45) |
| Depreciation | 43 | 38 |
| Amortisation of initial commission asset | 17 | 4 |
| Amortisation of amounts accrued in relation to income received on sale of units | (114) | (6) |
| Operating lease costs | 259 | 259 |
| Costs relating to Directors, members and employees (Note 5) | 8,759 | 9,185 |
| Services provided by the Group's auditors: | ||
| Fees payable to the Company's auditor for the audit of the parent Company and consolidated financial statements | 57 | 40 |
| Fees payable to the Company's auditor and its associates for other services: | ||
| – The audit of the Company's subsidiaries pursuant to legislation | 67 | 58 |
| – Taxation services | 35 | 28 |
| – Other services (mainly related to Reporting Accountant and Financial Due Diligence work) | 295 | 111 |
Adjusted profit (as explained in note 1(c) reconciled in the table below:
| Year ended 31-Mar-12 £'000 |
Year ended 31-Mar-11 £'000 |
|
|---|---|---|
| Loss for the year | (237) | (4,552) |
| Taxation on Continuing Operations | 250 | (544) |
| Taxation on Discontinued Operations | 271 | 6 |
| Profit/(loss) before tax from Continuing and Discontinued Operations | 284 | (5,090) |
| Share incentivisation expense | 621 | 433 |
| Severance compensation | 147 | 1,458 |
| Gain on sale of credit business | (1,834) | – |
| Acquisition related costs | 690 | – |
| Global equities team closure costs | – | 284 |
| Cost reduction and restructuring programme | 515 | 892 |
| Members' advance drawings | (531) | (292) |
| Depreciation and Intangible asset amortisation | 1,109 | 238 |
| Financial Services Compensation Scheme Levy | – | 414 |
| Adjustments | 717 | 3,427 |
| Adjusted profit/(loss) before tax | 1,001 | (1,663) |
| Interest receivable | (22) | (10) |
| Adjusted operating profit/(loss) | 979 | (1,673) |
Disclosures relating to the Group's financial instruments risk management policies are detailed in note 2. Cash earns interest at floating or fixed rates based on daily bank deposit rates. The weighted average effective interest rate on cash is 0.0% (2011: 0.0%).
| Year ended 31-Mar-12 £'000 |
Year ended 31-Mar-11 £'000 |
||
|---|---|---|---|
| (a) | Analysis of charge in year | ||
| Current tax: | |||
| UK corporation tax at 26% (2011: 28%) | (1) | 10 | |
| Adjustment in respect of discontinued operations | (271) | (6) | |
| Total current tax | (272) | 4 | |
| Deferred tax: | |||
| Deferred tax originated from timing differences | 522 | (548) | |
| Total charge in period | 250 | (544) | |
| (b) | Factors affecting current tax | ||
| Loss on ordinary activities before tax | (1,573) | (5,112) | |
| Profit/(loss) on ordinary activities at UK corporation tax rate of 26% (2011: 28%) | (409) | (1,431) | |
| Effects of: | |||
| Expenses not deductible for tax purposes | 270 | 262 | |
| Lower rates of tax on overseas earnings | (226) | (243) | |
| Depreciation in excess of capital allowances | 3 | 1 | |
| Adjustment in respect of Discontinued Operations capital gain | (265) | – | |
| Adjustment to deferred tax in respect of tax rate change | 151 | 166 | |
| Members drawings not taxable | 355 | 609 | |
| Deferred tax on overseas income | – | 34 | |
| Deferred tax | 371 | 58 | |
| Total taxation | 250 | (544) |
On 12 April 2011, the Group entered into a conditional business purchase agreement for the sale of its credit business including its credit team (the "Disposal") to Avoca Capital Holdings ("Avoca"), the sale completed on 30 June 2011. The two funds that the credit team managed, the Liontrust Credit Absolute Return Fund and the Liontrust Credit Fund were transferred to Avoca. The total consideration for the Disposal was 3.75% of the assets under management transferred. The gain on this has been calculated as follows:
| Year ended 31-Mar-12 £'000 |
Year ended 31-Mar-11 £'000 |
|
|---|---|---|
| Proceeds received from sale | 2,490 | – |
| Costs associated with sale | (56) | – |
| Cost of intangible asset held on balance sheet | (600) | – |
| Taxation on gain | (265) | – |
| Realised gain on sale of credit business | 1,569 | – |
Analysis as a result of Discontinued Operations is as follows:
| Year ended 31-Mar-12 £'000 |
Year ended 31-Mar-11 £'000 |
|
|---|---|---|
| Revenue | 275 | 989 |
| Member and Employee expenses | (223) | (853) |
| Administrative expenses | (29) | (114) |
| Tax | (6) | (6) |
| Profit after tax from Discontinued Operations | 17 | 16 |
| Pence | Pence | |
| Basic earnings per share for Discontinued Operations | 0.05 | 0.05 |
| Diluted earnings per share for Discontinued Operations | 0.05 | 0.05 |
Analysis of the cost of employees and members relating to the Discontinued Operations is detailed below and these amounts have been removed from note 5 Administration expenses.
| Year ended 31-Mar-12 |
|||||
|---|---|---|---|---|---|
| Employees | Members | ||||
| Actual number of members and employees during the year |
Wages and salaries £'000 |
Social security costs £'000 |
Total employee expense £'000 |
Members drawings charged as an expense £'000 |
|
| Fund management | 2 | – | – | – | 115 |
| Fund management support | 2 | – | – | – | 74 |
| Finance, Operations and IT | 2 | 1 | – | 1 | 34 |
| 6 | 1 | – | 1 | 223 |
| Year ended 31-Mar-11 |
|||||
|---|---|---|---|---|---|
| Employees | |||||
| Actual number of members and employees during the year |
Wages and salaries £'000 |
Social security costs £'000 |
Total employee expense £'000 |
Members drawings charged as an expense £'000 |
|
| Fund management | 2 | 141 | 17 | 158 | 273 |
| Fund management support | 2 | 120 | 15 | 135 | 120 |
| Finance, Operations and IT | 2 | 68 | 8 | 76 | 91 |
| 6 | 329 | 40 | 369 | 484 |
The calculation of basic earnings per share is based on profit after taxation for the year and the weighted average number of Ordinary Shares in issue for each period. The weighted average number of Ordinary Shares was 32,268,104 for the year (2011: 30,987,024). Shares held by the Liontrust Asset Management Employee Trust are not eligible for dividends and are treated as cancelled for the purposes of calculating earnings per share.
Diluted earnings per share are calculated on the same bases as set out above, after adjusting the weighted average number of Ordinary Shares for the effect of options to subscribe for new Ordinary Shares or Ordinary Shares held in the Liontrust Asset Management Employee Trust that were in existence during the year ended 31 March 2012. The adjusted weighted average number of Ordinary Shares so calculated for the year was 32,465,594 (2011: 33,337,489). This is reconciled to the actual weighted number of Ordinary Shares as follows:
| 2012 number |
2011 number |
|
|---|---|---|
| Weighted average number of Ordinary Shares | 32,268,104 | 30,987,024 |
| Weighted average number of dilutive Ordinary shares under option: – to the Liontrust Senior Incentive Plan |
– | 15,978 |
| – to the Liontrust Incentive Plan | 197,490 | 1,186,168 |
| – to the Liontrust Option Plan | – | – |
| – to the shareholders in Liontrust European Investment Services Limited | – | 1,148,319 |
| Adjusted weighted average number of Ordinary Shares | 32,465,594 | 33,337,489 |
Details of the options outstanding at 31 March 2012 to Directors are set out in the Directors' Remuneration Report on page 25.
On the 2 August 2011, the Group entered into a conditional agreement to purchase the fund management business of Occam Investment Management (Malta) Limited, Occam Asset Management LLP and Occam Investment Services Limited (together "Occam"). The purchase completed on 4 October 2011 for a consideration of £2,166,000.
Management treat the contracts for the Occam funds as intangible assets (as defined in the accounting policies) and they are held on the balance sheet of the appropriate Group entity.
| 2012 £'000 |
2011 £'000 |
|
|---|---|---|
| Balance as at 1 April | 600 | 800 |
| Intangible assets purchased in the year | 2,166 | – |
| Intangible assets sold in the year (see note 10) | (600) | – |
| Amortisation during the year | (1,066) | (200) |
| Balance as at 31 March | 1,100 | 600 |
From 5 October 2011 to 31 March 2012 the Occam funds contributed £212,000 to the Group's profit before tax.
Had the Occam funds been owned by the Group for the full financial year to 31 March 2012, their contribution to revenue would have been £434,000. This amount is derived from actual investment management fees earned less the costs incurred by relevant members and employees, and operating expenses.
Following the annual impairment review of the intangible assets, as required by IFRS, Management took the decision to accelerate the amortisation by £874,000 to reflect a reduction in the level of AuM of the Occam funds compared to the level at the acquisition date.
Amortisation has been recorded within administration expenses.
| Leasehold Improvements |
Office Equipment |
Computer Equipment |
Total | |
|---|---|---|---|---|
| Year to 31 March 2012 | £'000 | £'000 | £'000 | £'000 |
| Cost | ||||
| At 1 April 2011 | 118 | 212 | 163 | 493 |
| Additions | 6 | – | 35 | 41 |
| Disposals | – | – | – | – |
| At 31 March 2012 | 124 | 212 | 198 | 534 |
| Depreciation | ||||
| At 1 April 2011 | 26 | 192 | 152 | 370 |
| Charge for the year | 14 | 12 | 17 | 43 |
| Disposals | – | – | – | – |
| At 31 March 2012 | 40 | 204 | 169 | 413 |
| Net Book Value | ||||
| At 31 March 2012 | 84 | 8 | 29 | 121 |
| At 31 March 2011 | 92 | 20 | 11 | 123 |
| Leasehold Improvements |
Office Equipment |
Computer Equipment |
Total | |
| Year to 31 March 2011 | £'000 | £'000 | £'000 | £'000 |
| Cost | ||||
| At 1 April 2010 | 72 | 208 | 163 | 443 |
| Additions | 46 | 4 | – | 50 |
| Disposals | – | – | – | – |
| 118 | 212 | 163 | 493 |
| At 1 April 2010 | 15 | 179 | 138 | 332 |
|---|---|---|---|---|
| Charge for the year | 11 | 13 | 14 | 38 |
| Disposals | – | – | – | – |
| At 31 March 2011 | 26 | 192 | 152 | 370 |
| Net Book Value |
Depreciation has been included in the Consolidated Statement of Comprehensive Income within administration expenses
| Deferred tax assets | 2012 £'000 |
2011 £'000 |
|---|---|---|
| Balance as at 1 April | 2,160 | 711 |
| Deferred tax relief reversed on IFRS2 Options charge | – | (58) |
| Deferred tax reversed on prior year losses | – | (320) |
| Deferred tax reversed on timing differences | (170) | – |
| Deferred tax prior year adjustment | (201) | – |
| Deferred tax on current year losses | – | 1,092 |
| Movement to deferred tax from prior year tax receivable | – | 901 |
| Movement in deferred tax on change in tax rate to 24% (2011: 26%) | (151) | (166) |
| Balance as at 31 March | 1,638 | 2,160 |
The following items are included in the above deferred tax balance: Deferred tax relating to timing differences from losses arising in a group company that are not eligible for group relief £nil (2011: £nil).
Deferred tax relating to losses which are expected to be credited to taxation payable on future profits £1,638,000 (2011: £2,160,000).
| Deferred tax liabilities | 2012 £'000 |
2011 £'000 |
|---|---|---|
| Balance as at 1 April | (57) | (160) |
| Deferred tax on fair value gains on financial assets held as available-for-sale | 57 | 103 |
| Balance as at 31 March | – | (57) |
The following items are included in the above deferred tax balance: Deferred tax relating to unrealised gains on investments £nil (2011: £57,000); Deferred tax on overseas income yet to be remitted £nil (2011: £nil).
A number of changes to the UK Corporation tax system were announced in the March 2012 UK Budget Statement. A resolution passed by Parliament on 29 March 2012 reduced the main rate of corporation tax to 24% from 1 April 2013. Deferred tax has been recognised at 24% to reflect this reduction.
| 2012 £'000 |
2011 £'000 |
|
|---|---|---|
| Trade receivables | ||
| – Fees receivable | 3,631 | 1,625 |
| – Unit trust sales and cancellations | 13,189 | 6,769 |
| Prepayments and accrued income | 721 | 412 |
| Members' advance drawings | 823 | 292 |
| Corporation tax receivable | 51 | 1,076 |
| Initial commission asset | 47 | 31 |
| 18,462 | 10,205 |
All financial assets listed above are non-interest bearing. The carrying amount of these non-interest bearing trade and other receivables approximates their fair value.
Trade receivables that are less than 3 months past due are not considered impaired. As at 31 March 2012, trade receivables of £nil (2011: £nil) were past due but not impaired.
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:
– Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets and liabilities;
– 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);
– 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 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. The gain on the fair value adjustments during the year was £191,000 (2011: loss of £48,000).
The Group's assets held as available-for-sale represent shares in the Liontrust European Absolute Alpha Return Fund and the Liontrust Emerging Markets Absolute Return Fund (both sub-funds of Liontrust Umbrella Fund Plc (a Dublin Open ended investment company) and are valued at bid price). The gain on the fair value adjustments during the year net of tax was £nil (2011:£445,000). Foreign currency assets are translated at rates of exchange ruling at the balance sheet date and any exchange rate differences arising are shown in note 19.
| 2012 | 2011 | |||||
|---|---|---|---|---|---|---|
| Assets held at fair value through profit and loss £'000 |
Assets held as available for-sale £'000 |
Total £'000 |
Assets held at fair value through profit and loss £'000 |
Assets held as available for-sale £'000 |
Total £'000 |
|
| Financial assets in Level 1 | ||||||
| UK Authorised unit trusts | 165 | – | 165 | 441 | – | 441 |
| Guernsey open ended investment company | 29 | – | 29 | 28 | – | 28 |
| Dublin Open Ended Investment company | – | 101 | 101 | – | – | – |
| 194 | 101 | 295 | 469 | – | 469 | |
| Financial assets in Level 2 | ||||||
| Cayman open ended investment company | – | – | – | – | 4,019 | 4,019 |
| Forward foreign exchange contract | – | – | – | (165) | – | (165) |
| Luxembourg Société d'investissement à capital variable | – | – | – | – | 4,207 | 4,207 |
| – | – | – | (165) | 8,226 | 8,061 | |
| Total Financial Assets | 194 | 101 | 295 | 304 | 8,226 | 8,530 |
As a result of operating activities the Group has made gains and losses on foreign currency translation. The activities and the relevant foreign currency gains and losses associated with them are identified below:
| 2011 £'000 |
2010 £'000 |
|
|---|---|---|
| Foreign currency translation losses on: | ||
| – Other operating activities | (80) | (45) |
| (80) | (45) |
Gain/(losses) on foreign currency translations are taken to the Statement of Comprehensive Income within Revenue.
| 2012 £'000 |
2011 £'000 |
|
|---|---|---|
| Trade payables – unit trust repurchases and creations Other payables including taxation and social security |
12,739 145 |
7,074 141 |
| Deferred income and sundry payables | 4,048 | 3,062 |
| 16,932 | 10,277 |
All financial liabilities listed above are non-interest bearing. The carrying amount of these non-interest bearing trade and other payables approximates their fair value.
| 2012 £'000 |
2011 £'000 |
|
|---|---|---|
| Amounts accrued in relation to income received on the sale of units | 233 233 |
119 119 |
| 2012 Shares |
2012 £'000 |
2011 Shares |
2011 £'000 |
|
|---|---|---|---|---|
| Authorised | ||||
| As at 1 April | 60,000,000 | 600 | 60,000,000 | 600 |
| Issued during the year | – | – | – | – |
| As at 31 March | 60,000,000 | 600 | 60,000,000 | 600 |
| Allotted, called up and fully paid | ||||
| As at 1 April | 35,344,890 | 353 | 33,665,008 | 337 |
| Issued during the year | 1,763,710 | 18 | 1,679,882 | 16 |
| As at 31 March | 37,108,600 | 371 | 35,344,890 | 353 |
Approval was given at the 2002 Annual General Meeting for the grant of options to employees under the Liontrust Enterprise Management Incentive Scheme (the "LEMIS"). Approval was given at a General Meeting in January 2011 for the grant of options under the Liontrust Senior Incentive Plan (the "LSIP"). The Board adopted the Liontrust Incentive Plan (the "LIP") in November 2009 and the Liontrust Option Plan (the "LOP") in December 2009. The options granted under the LEMIS, LSIP, LIP and LOP, including the Executive Directors (in the case of LEMIS, LIP and LSIP), were as follows:
| Issue Date | 1 April 2011 | Options Granted |
Options Exercised |
Lapsed | 31 March 2012 | Exercise price |
Scheme |
|---|---|---|---|---|---|---|---|
| 3 December 2009 | 1,000,000 | – | – | 1,000,000 | – | 1.0 pence | LIP |
| 10 February 2011 | 750,000 | – | – | 750,000 | – | 1.0 pence | LIP |
| 10 February 2011 | 186,301 | – | – | 63,347 | 122,954 | 110.5 pence | LOP |
| 15 April 2011 | 200,000 | – | – | – | 200,000 | 1.0 pence | LIP |
| 1 February 2012 | 3,000,000 | – | – | – | 3,000,000 | 1.0 pence | LSIP |
| Issue Date | 1 April 2010 | Options Granted |
Options Exercised |
Lapsed | 31 March 2011 | Exercise price |
Scheme |
|---|---|---|---|---|---|---|---|
| 30 July 2002 | 445,183 | – | – | 445,183 | – | 287.5 pence | LEMIS |
| 26 June 2003 | 114,295 | – | – | 114,295 | – | 417.5 pence | LEMIS |
| 5 November 2003 | 107,228 | – | – | 107,228 | – | 445.0 pence | LEMIS |
| 15 December 2004 | 428,277 | – | – | 428,277 | – | 290.0 pence | LEMIS |
| 3 December 2009 | 1,000,000 | – | – | – | 1,000,000 | 1.0 pence | LIP |
| 10 February 2010 | 1,100,000 | – | – | 350,000 | 750,000 | 1.0 pence | LIP |
| 10 February 2010 | 451,772 | – | – | 265,471 | 186,301 | 110.5 pence | LOP |
| 15 April 2010 | – | 200,000 | – | – | 200,000 | 1.0 pence | LIP |
| 1 February 2011 | – | 3,000,000 | – | – | 3,000,000 | 1.0 pence | LSIP |
No options under LEMIS, LIP, LOP and LSIP were exercised during the year.
Under the Liontrust Members Incentive Scheme ("LMIS") certain individual members have been allocated Incentive Capital Interests, which entitle such individual member to a fixed amount. The entitlement which the holder of an Incentive Capital Interest would have is calculated on the basis of the application of a percentage to the "Maximum Incentive Capital Interest" ("MICI") attributable to that Incentive Capital Interest. The MICI is a variable amount in Pounds Sterling equal to the number of Ordinary shares set out in his side letter multiplied by the price of Ordinary shares from time to time (by reference to a 30 day market average price). The MICI allocated, in terms of number of Ordinary shares, to individual members were as follows:
| Issue Date | 1 April 2011 | Granted | Exercised | Lapsed | 31 March 2012 | Exercise price |
Scheme |
|---|---|---|---|---|---|---|---|
| 14 April 2011 | – | 1,475,000 | – | – | 1,475,000 | Nil | LMIS |
| 22 November 2011 | – | 1,000,000 | – | – | 1,000,000 | Nil | LMIS |
| 28 March 2012 | – | 75,000 | – | – | 75,000 | Nil | LMIS |
No Incentive Capital Interests under LMIS were exercised during the year.
Details of the Directors' share options can be found in the Directors' Remuneration report on page 25.
LEMIS, LIP, LOP and LSIP operate in conjunction with the Liontrust Asset Management Employee Trust on the basis that at least 50% of the options for LEMIS, 100% of the options for LIP and LOP, and a percentage determined by the Remuneration Committee for LSIP will be satisfied by market purchased shares. This is to ensure that dilution of shareholders' interest is limited. Further shares have been purchased to provide a hedge against the employer's national insurance liability that will arise if the market price of the shares exceeds the option price on exercise of unapproved options. At 31 March 2012 the weighted average remaining life of the options was 8.7 years (2011: 9.1 years).
At 31 March 2012, the Liontrust Asset Management Employee Trust owned 3,727,335 shares (2011: 3,727,335) at a cost of £12,172,000 (2011: £12,172,000). Dividends on these shares have been waived and they are treated as cancelled for the purposes of calculating the earnings per share of the Group. As at 31 March 2012 the market value of the shares was £4,286,000 (2011: £3,094,000).
The Group and Company are committed to making the total of future minimum lease payments under non-cancellable operating leases in each of the following periods:
| Year ended 31-Mar-12 £'000 |
Year ended 31-Mar-11 £'000 |
|
|---|---|---|
| Amounts due: | ||
| Within one year | 259 | 259 |
| Between one year and five years | 1,038 | 1,038 |
| Later than five years | 173 | 432 |
| 1,470 | 1,729 |
During the year the Group received fees from unit trusts under management of £11,902,000 (2011: £10,099,000). Transactions with these unit trusts comprised creations of £378,606,000 (2011: £158,692,000) and liquidations of £164,816,000 (2011: £158,267,000). 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 31 March 2012 the Group owed the unit trusts £12,737,000 (2011: £4,462,000) in respect of unit trust creations and was owed £14,428,000 (2011: £2,274,000) in respect of unit trust cancellations and fees.
Compensation to key management personnel (executive Directors) is disclosed in the Directors' Remuneration Report on page 22.
As previously explained, the Group can earn performance fees on some of the segregated and hedge fund accounts that it manages. In some cases a proportion of the fee earned is deferred until the next performance fee is payable or offset against future underperformance on that account. As there is no certainty that such deferred fees will be collectable in future years, the Group's accounting policy is to include performance fees in income only when they become due and collectable and therefore the element (if any) deferred beyond 31 March 2012 has not been recognised in the results for the year.
Contingent liabilities as at 31 March 2012 amount to £nil (2011: £nil).
On 13 March 2012, Liontrust Asset Management PLC ("Liontrust"), announced that it had entered into a conditional share purchase agreement with Walker Crips Group Plc ("Walker Crips") to purchase (the "Acquisition") the entire issued share capital of Walker Crips Asset Managers Limited. The Acquisition completed on 12 April 2012 and Liontrust issued 1,851,719 new Ordinary shares, £4 million of convertible un-secured loan stock and £6,447,853 in cash as consideration payable to Walker Crips, which included net assets of £0.448 million.
We have audited the financial statements of Liontrust Asset Management PLC for the year ended 31 March 2012 which comprise the Statement of Comprehensive Income, the Balance Sheet, the Cash Flow Statement, the Statement of Changes in Equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
As explained more fully in the Directors' Responsibilities Statement set out on pages 18, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
In our opinion the parent company financial statements:
In our opinion the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
We have reported separately on the Group financial statements of Liontrust Asset Management PLC for the year ended 31 March 2012.
for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Edinburgh 19 June 2012
for the year ended 31 March 2012
| Notes | Year ended 31-Mar-12 £'000 |
Year ended 31-Mar-11 £'000 |
|---|---|---|
| Revenue | 114 | 199 |
| Gross profit | 114 | 199 |
| Realised gain on sale of financial assets | 212 | 701 |
| Administration expenses 29 |
(2,263) | (3,317) |
| Operating loss 30 |
(1,937) | (2,417) |
| Interest receivable 31 |
5 | – |
| Loss before tax | (1,932) | (2,417) |
| Taxation 32 |
(423) | 315 |
| Loss for the year | (2,355) | (2,102) |
| Other comprehensive income: | ||
| Net gains on available-for-sale financial assets net of tax | 61 | 442 |
| Amount recycled through the statement of comprehensive income | (212) | (701) |
| Other Comprehensive income for the year, net of tax | (151) | (259) |
| Total comprehensive income | (2,506) | (2,361) |
The notes on pages 54 to 60 form an integral part of these Company financial statements.
as at 31 March 2012
| Notes | 31-Mar-12 £'000 |
31-Mar-11 £'000 |
|---|---|---|
| Assets | ||
| Non current assets | ||
| Property, plant and equipment 33 |
121 | 123 |
| Investment in subsidiary undertakings 34 |
11,690 | 11,690 |
| Deferred tax assets 35 |
792 | 1,215 |
| Loan to Employee Benefit Trust 28 |
4,360 | 4,360 |
| Total Non current assets | 16,963 | 17,388 |
| Current assets | ||
| Trade and other receivables 36 |
1,746 | 395 |
| Financial assets 37 Cash and cash equivalents |
101 872 |
8,061 88 |
| Total Current assets | 2,719 | 8,544 |
| Liabilities | ||
| Current liabilities | ||
| Deferred tax liabilities 35 |
– | (57) |
| Trade and other payables 39 |
(1,053) | (6,371) |
| Total Current liabilities | (1,053) | (6,428) |
| Net current assets | 1,666 | 2,116 |
| Net assets | 18,629 | 19,504 |
| Shareholders' equity attributable to owners of the parent | ||
| Ordinary shares 40 |
371 | 353 |
| Share premium | 11,552 | 10,272 |
| Capital redemption reserve | 15 | 15 |
| Revaluation reserve | – | 151 |
| Retained earnings | 6,691 | 8,713 |
| Total equity | 18,629 | 19,504 |
Approved by the Board of Directors on 19 June 2012 and signed on its behalf by
V.K. Abrol, Chief Operating Officer and Chief Financial Officer.
The notes on pages 54 to 60 form an integral part of these Company financial statements.
Company Number 2954692
for the year ended 31 March 2012
| Year ended 31-Mar-12 £'000 |
Year ended 31-Mar-11 £'000 |
|
|---|---|---|
| Cash flows from operating activities | ||
| Cash inflow from operations | 603 | 10,334 |
| Cash outflow from operations | (9,166) | (10,071) |
| Net cash (used in)/generated from operations | (8,563) | 263 |
| Interest received | 5 | – |
| Net cash (used in)/generated from operating activities | (8,558) | 263 |
| Cash flows from investing activities | ||
| Purchase of property and equipment | (41) | (50) |
| Investment in subsidiaries | – | (3,978) |
| Sale of seeding investments | 7,965 | 661 |
| Net cash generated from/(used in) investing activities | 7,924 | (3,367) |
| Cash flows from financing activities | ||
| Issue of shares | 1,298 | 1,326 |
| Dividends received | 120 | – |
| Net cash used in financing activities | 1,418 | 1,326 |
| Net increase/(decrease) in cash and cash equivalents | 784 | (1,778) |
| Effect of exchange rate changes | – | – |
| Opening cash and cash equivalents* | 88 | 1,866 |
| Closing cash and cash equivalents | 872 | 88 |
* Cash and cash equivalents consist only of cash balances.
The notes on pages 54 to 60 form an integral part of these Company financial statements.
for the year ended 31 March 2012
| Share capital £'000 |
Share premium £'000 |
Capital redemption £'000 |
Revaluation £'000 |
Retained earnings £'000 |
Total Equity £'000 |
|
|---|---|---|---|---|---|---|
| Balance at 1 April 2011 brought forward | 353 | 10,272 | 15 | 151 | 8,713 | 19,504 |
| Profit for the year | – | – | – | – | (2,355) | (2,355) |
| Net gains on available-for-sale financial assets net of tax | – | – | – | 61 | – | 61 |
| Amounts recycled through the Statement of | ||||||
| Comprehensive Income | – | – | – | (212) | – | (212) |
| Total comprehensive income for the year | – | – | – | (151) | (2,355) | (2,506) |
| Shares issued | 18 | 1,280 | – | – | – | 1,298 |
| Equity share options issued | – | – | – | – | 333 | 333 |
| Balance at 31 March 2012 | 371 | 11,552 | 15 | – | 6,691 | 18,629 |
for the year ended 31 March 2011
| Share capital £'000 |
Share premium £'000 |
Capital redemption £'000 |
Revaluation £'000 |
Retained earnings £'000 |
Total Equity £'000 |
|
|---|---|---|---|---|---|---|
| Balance at 1 April 2010 brought forward | 337 | 8,962 | 15 | 410 | 10,759 | 20,483 |
| Profit for the year | – | – | – | – | (2,102) | (2,102) |
| Net gains on available-for-sale financial assets net of tax | – | – | – | 442 | – | 442 |
| Amounts recycled through the Statement of | ||||||
| Comprehensive Income | – | – | – | (701) | – | (701) |
| Total comprehensive income for the year | – | – | – | (259) | (2,102) | (2,361) |
| Shares issued | 16 | 1,310 | – | – | – | 1,326 |
| Equity share options issued | – | – | – | – | 56 | 56 |
| Balance at 31 March 2011 | 353 | 10,272 | 15 | 151 | 8,713 | 19,504 |
The notes on pages 54 to 60 form an integral part of these Company financial statements.
The separate financial statements of the Company are presented as required by the Companies Act 2006. As permitted by that Act, the separate financial statements have been prepared in accordance with International Financial Reporting Standards, which comprise standards and interpretations approved by the International Financial Reporting Interpretations Committee or their predecessors, which have been approved by the European Commission as at 31 March 2011.
The financial statements have been prepared on the going concern basis under the historical cost convention (except for the measurement of financial assets at fair value through profit and loss and financial assets available-for-sale which are held at their fair value) and in accordance with applicable accounting standards. The principle accounting policies are the same as those set out in note 1.
Investment in subsidiaries are stated at cost less, where appropriate, provisions for impairment.
Notes 26 to 44 reflect the information for the Company.
The Company's activities expose it to a variety of financial risks: market risk (including price risk, cash flow interest rate risk and foreign exchange risk), credit risk and liquidity risk. The Company is covered by the Group's overall risk management programme. The risk management policies are the same as those set out in note 2 and elsewhere in the report and financial statements.
The specific risks affecting the Company are as follows:
The investments in Liontrust Umbrella Fund are valued on a daily basis at bid price. The investments are held as an asset available-for-sale and is held at fair value and any permanent impairment in the value of the shares held would be taken to revenue.
Based on the holdings in Liontrust Umbrella Fund at the balance sheet date a price movement of 1% would result in a movement in the value of the investment of £1,000 (2011: n/a).
The Company holds cash on deposit. The interest on these balances is based on floating rates and fixed rates. The Company monitors its exposure to interest rate movements and may decide to adjust the balance between deposits on fixed or floating interest rates, or adjust the level of deposits. Following a review of sensitivity based on average cash holdings during the year a 1% increase or decrease in the interest rate will cause a £27,000 increase or decrease in interest receivable (2011: £6,000).
In addition to the risks covered by the Group risk management polices. The Company is subject to some specific risks relating to its interaction with other group companies. The company reviews its balances due to and from other group companies on a regular basis.
The company is the sponsor of Liontrust Asset Management Employee Trust (the 'Trust'). An annual impairment review was carried out under the appropriate accounting standards and the value of the loan to the EBT was calculated at £4,360,000 (2011: £4,360,000). The current value of the shares in the trust are disclosed in Note 21.
| Year ended 31-Mar-12 £'000 |
Year ended 31-Mar-11 £'000 |
|
|---|---|---|
| Employee costs | ||
| – Director, member and employee costs | 502 | 536 |
| – Share incentivisation expense | 381 | 385 |
| – Termination costs | 101 | 598 |
| 984 | 1,519 | |
| Non employee costs | ||
| Other administration expenses | 1,279 | 1,798 |
| 2,263 | 3,317 |
The average number of members and employees engaged in business for the Company excluding Non-executive Directors, was 5 (2011: 5). All members and employees are involved in the investment management business of the Group. The costs incurred in respect of the Directors, members and employees was:
| Year ended 31-Mar-12 £'000 |
Year ended 31-Mar-11 £'000 |
|
|---|---|---|
| Share incentivisation expense | ||
| – Share option expense | 333 | 56 |
| – Share incentive plan expense | 25 | 75 |
| – Share option NI liability | – | – |
| – Share option related administration expenses | 23 | 254 |
| 381 | 385 |
| Year ended 31-Mar-12 | ||||
|---|---|---|---|---|
| Average number of members and employees during the year |
Wages and salaries £'000 |
Social security costs £'000 |
Total £'000 |
|
| General management | 2 | 215 | 28 | 243 |
| Finance, Operations and IT | 3 | 156 | 4 | 160 |
| Non-executive Directors | 3 | 91 | 8 | 99 |
| 8 | 462 | 40 | 502 |
| Year ended 31-Mar-11 | ||||
|---|---|---|---|---|
| Average number of members and employees during the year |
Wages and salaries £'000 |
Social security costs £'000 |
Total £'000 |
|
| General management | 2 | 282 | 16 | 298 |
| Finance, Operations and IT | 3 | 137 | 8 | 145 |
| Non-executive Directors | 4 | 88 | 5 | 93 |
| 9 | 507 | 29 | 536 |
| Year ended 31-Mar-12 £'000 |
Year ended 31-Mar-11 £'000 |
|
|---|---|---|
| The following items have been included in arriving at operating loss: | ||
| Foreign exchange (losses)/gains | (22) | (5) |
| Depreciation | 43 | 38 |
| Staff costs (note 29) | 984 | 1,519 |
| Services provided by the Company's auditors: | ||
| Fees payable to the company's auditor for the audit of the company's annual financial statements | 10 | 10 |
Fees paid to PricewaterhouseCoopers LLP for non-audit services to the Company are not disclosed in the financial statements because the Group's consolidated financial statements are required to disclose such fees on a consolidated basis (see note 6).
The Company follows the same risk management policies as detailed for the Group in note 2. Cash earns interest at floating or fixed rates based on daily bank deposit rates. The weighted average effective interest rate on cash is 0.0% (2011: 0.0%).
| Year | Year | |
|---|---|---|
| ended | ended | |
| 31-Mar-12 £'000 |
31-Mar-11 £'000 |
|
| (a) Analysis of charge in year | ||
| Current tax: | ||
| UK corporation tax at 26% (2011: 28%) | – | – |
| Adjustments in respect of prior year | – | – |
| Total current tax (note (b)) | – | – |
| Deferred tax | 423 | (315) |
| Total charge in period | 423 | (315) |
| (b) Factors affecting current tax | ||
| Loss on ordinary activities before tax | (1,932) | (2,417) |
| Loss on ordinary activities at UK corporation tax rate of 28% (2011: 28%) | (502) | (677) |
| Effects of: | ||
| Group dividends not deductible for tax purposes | – | 234 |
| Expenses not deductible for tax purposes | 269 | – |
| Depreciation in excess of capital allowances | 3 | 1 |
| adjustment in respect of deferred tax recoverability rate to 24% (2011: 26%) | 66 | 93 |
| Taxation relieved from other group companies | 230 | – |
| Deferred tax on overseas income | – | 34 |
| Deferred tax | 357 | – |
| Total Taxation | 423 | (315) |
| Year to 31 March 2012 | Leasehold Improvements £'000 |
Office Equipment £'000 |
Computer Equipment £'000 |
Total £'000 |
|---|---|---|---|---|
| Cost | ||||
| At 31 March 2011 | 118 | 212 | 163 | 493 |
| Additions | 6 | – | 35 | 41 |
| Disposals | – | – | – | – |
| At 31 March 2012 | 124 | 212 | 198 | 534 |
| Depreciation | ||||
| At 31 March 2011 | 26 | 192 | 152 | 370 |
| Charge for the year | 14 | 12 | 17 | 43 |
| Disposals | – | – | – | – |
| At 31 March 2012 | 40 | 204 | 169 | 413 |
| Net Book Value | ||||
| At 31 March 2012 | 84 | 8 | 29 | 121 |
| At 31 March 2011 | 92 | 20 | 11 | 123 |
| Year to 31 March 2011 | Leasehold Improvements £'000 |
Office Equipment £'000 |
Computer Equipment £'000 |
Total £'000 |
|---|---|---|---|---|
| Cost | ||||
| At 31 March 2010 | 72 | 208 | 163 | 443 |
| Additions | 46 | 4 | – | 50 |
| Disposals | – | – | – | – |
| At 31 March 2011 | 118 | 212 | 163 | 493 |
| Depreciation | ||||
| At 31 March 2010 | 15 | 179 | 138 | 332 |
| Charge for the year | 11 | 13 | 14 | 38 |
| Disposals | – | – | – | – |
| At 31 March 2011 | 26 | 192 | 152 | 370 |
| Net Book Value | ||||
| At 31 March 2011 | 92 | 20 | 11 | 123 |
| At 31 March 2010 | 57 | 29 | 25 | 111 |
Depreciation has been included in the Statement of Comprehensive Income within administration expenses.
The Company's investment in subsidiary undertakings represents 100% interests (unless otherwise stated) in the ordinary shares, capital, voting rights and redeemable preference shares (unless stated otherwise) of Liontrust Investment Funds Limited, Liontrust Investment Services Limited, Liontrust European Investment Services Limited (100%), and Liontrust Management Services Limited, all registered in England; and Liontrust International (Guernsey) Limited, incorporated in Guernsey.
| 2012 £'000 |
2011 £'000 |
|
|---|---|---|
| Balance at 1 April Additions during the year |
11,690 – |
7,712 3,978 |
| Write downs during the year | – | – |
| Balance at 31 March | 11,690 | 11,690 |
| Deferred tax assets | 2012 £'000 |
2011 £'000 |
|---|---|---|
| Balance as at 1 April | 1,215 | 231 |
| Deferred tax on current year losses | – | 408 |
| Deferred tax on prior year losses | – | 669 |
| Deferred tax adjustment on prior year | (357) | – |
| Adjustment in respect of tax rate change | (66) | (93) |
| Balance as at 31 March | 792 | 1,215 |
The following items are included in the above deferred tax balance: Deferred tax relating to losses which are expected to be credited to taxation payable on future profits: £792,000 (2011: £1,215,000).
| Deferred tax liabilities | 2012 £'000 |
2011 £'000 |
|---|---|---|
| Balance as at 1 April | (57) | (160) |
| Deferred tax reversed on overseas income to be remitted | – | – |
| Deferred tax on fair value gains on financial assets held as available-for-sale | 57 | 103 |
| Balance as at 31 March | – | (57) |
The following items are included in the above deferred tax balance: Deferred tax relating to unrealised gains on investments £nil (2011: £57,000).
A number of changes to the UK Corporation tax system were announced in the March 2012 UK Budget Statement. A resolution passed by Parliament on 29 March 2012 reduced the main rate of corporation tax to 24% from 1 April 2013. Deferred tax has been recognised at 24% to reflect this reduction.
| 2012 £'000 |
2011 £'000 |
|
|---|---|---|
| Receivables due from subsidiary undertakings | 1,602 | 349 |
| Prepayments and accrued income | 144 | 46 |
| 1,746 | 395 |
All financial assets listed above are non-interest bearing. The carrying amount of these non-interest bearing trade and other receivables approximates their fair value.
The Company's financial assets held as available-for-sale represent shares in the sub funds of the Liontrust Umbrella Fund Plc and are valued at bid price. The assets are all categorized as Level 2 in line with the categorization detailed in note 17.
| 2012 | 2011 | |||||
|---|---|---|---|---|---|---|
| Assets held at fair value through profit and loss £'000 |
Assets held as available-for sale £'000 |
Total £'000 |
Assets held at fair value through profit and loss £'000 |
Assets held as available-for sale £'000 |
Total £'000 |
|
| Financial assets | ||||||
| Dublin Open Ended Investment Company | – | 101 | 101 | – | – | – |
| Luxembourg SICAV | – | – | – | – | 4,207 | 4,207 |
| Forward foreign exchange contract | – | – | – | (165) | – | (165) |
| Cayman open ended investment company | – | – | – | – | 4,019 | 4,019 |
| – | 101 | 101 | (165) | 8,226 | 8,061 |
| 2012 £'000 |
2011 £'000 |
|
|---|---|---|
| Foreign currency translation gain/(losses) on: | ||
| - Other operating activities | (22) | 16 |
| (22) | 16 |
Gain/(losses) on foreign currency translations are taken to the income statement within Revenue.
| 2012 £'000 |
2011 £'000 |
|
|---|---|---|
| Other payables including taxation and social security | – | – |
| Payables due to subsidiary undertakings | 137 | 5,945 |
| Deferred income and sundry payables | 916 | 426 |
| NI liability on share options | – | – |
| 1,053 | 6,371 |
All financial liabilities listed above are non-interest bearing. The carrying amount of these non-interest bearing trade and other payables approximates their fair value.
| 2012 Shares |
2012 £'000 |
2011 Shares |
2011 £'000 |
|
|---|---|---|---|---|
| Authorised | ||||
| As at 1 April | 60,000,000 | 600 | 60,000,000 | 600 |
| Issued during the year | – | – | – | – |
| As at 31 March | 60,000,000 | 600 | 60,000,000 | 600 |
| Allotted, called up and fully paid | ||||
| As at 1 April | 35,344,890 | 353 | 33,665,008 | 337 |
| Issued during the year | 1,763,710 | 18 | 1,679,882 | 16 |
| As at 31 March | 37,108,600 | 371 | 35,344,890 | 353 |
The Company is committed to making the total of future minimum lease payments under non-cancellable operating leases in each of the following periods:
| Year ended 31-Mar-12 £'000 |
Year ended 31-Mar-11 £'000 |
|
|---|---|---|
| Amounts due | ||
| within one year | 259 | 259 |
| Between one year and five years | 1,038 | 1,038 |
| Later than five years | 173 | 432 |
| 1,470 | 1,729 |
As at 31 March 2012 the Company owed the following intercompany balances to:
Liontrust Investment Funds Limited - £nil (2011: £588,000); Liontrust Investment Services Limited - £849,000 (2011: £697,000); and Liontrust Investment Partners LLP - £nil (2011: £3,261,000); and Liontrust European Investment Services Limited - £nil (2011: £1,399,000); and Liontrust International (Guernsey) Limited - £316,000 (2011: £nil), these amounts arose from Group operations. The Liontrust Asset Management Employee Trust - £4,360,000 (2011: £4,360,000).
As at 31 March 2012 the Company was owed the following intercompany balances by:
Liontrust Management Services Limited - £330,000 (2011: £252,000); and Liontrust Fund Partners LLP - £1,589,000 (2011: £91,000); and Liontrust Investment Partners LLP - £815,000 (2011: £nil); and Liontrust European Investment Services Limited - £33,000 (2011: £nil); and Liontrust International (Guernsey) Limited - £nil (2011: £5,000); these amounts arose from Group operations.
Contingent assets as at 31 March 2012 amount to £nil (2011: £nil).
Contingent liabilities as at 31 March 2012 amount to £nil (2011: £nil).
On 13 March 2012, Liontrust Asset Management PLC ("Liontrust"), announced that it had entered into a conditional share purchase agreement with Walker Crips Group Plc ("Walker Crips") to purchase (the "Acquisition") the entire issued share capital of Walker Crips Asset Managers Limited. The Acquisition completed on 12 April 2012 and Liontrust issued 1,851,719 new Ordinary shares, £4 million of convertible un-secured loan stock and £6,447,853 in cash as consideration payable to Walker Crips, which included net assets of £0.448 million.
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.
The Company's shares are quoted on the London Stock Exchange and the price appears daily in The Financial Times, (listed under 'General Financial').
Liontrust UK Growth Fund Liontrust Income Fund Liontrust UK Smaller Companies Fund Liontrust Special Situations Fund Liontrust FTSE 100 Tracker Fund Liontrust European Growth Fund Liontrust European Absolute Return Fund Liontrust Asia Income Fund
CF Liontrust Macro Equity Income Fund CF Liontrust Macro UK Growth Fund CF Liontrust Macro UK High Alpha Fund
Liontrust Umbrella Fund Plc, comprising four sub funds: Liontrust Asia Fund Liontrust Emerging Markets Absolute Return Fund Liontrust European Absolute Alpha Fund Liontrust Pan European Fund
Liontrust Guernsey Fund Limited, comprising two sub funds: Liontrust First Equity Fund Liontrust Dynamic Income Fund
Liontrust Sorbus Fund inc. Liontrust Diversity Fund inc.
The prices of Liontrust's range of authorised unit trusts are listed on our website www.liontrust.co.uk.
For further information on the Company's range of funds and services please contact our Broker Services Department at:
Liontrust Fund Partners LLP 2 Savoy Court London WC2R 0EZ
Telephone: 020 7412 1700 Facsimile: 020 7412 1779 e-mail: [email protected] or visit: www.liontrust.co.uk
Year End 31 March Half Year End 30 September Results announced Full year: June, half year: November Interim report available December Annual Report available June Annual General Meeting September
| Group subsidiary entities – Board members: | |||||
|---|---|---|---|---|---|
| Liontrust Investment Funds Limited | |||||
| V.K. Abrol | J.S. Ions | ||||
| Liontrust Fund Partners LLP | |||||
| A list of members is open for inspection at 2 Savoy Court, London WC2R 0EZ | |||||
| Liontrust Investment Services Limited V.K. Abrol |
J.S. Ions | ||||
| Liontrust Investment Partners LLP A list of members is open for inspection at 2 Savoy Court, London WC2R 0EZ |
|||||
| Liontrust International (Guernsey) Limited E.J.F. Catton G. M. Harrison |
S. McMahon | ||||
| Investment companies – Board members: | |||||
| Liontrust Guernsey Fund Limited E.J.F. Catton G. M. Harrison |
S. McMahon | ||||
| Liontrust Umbrella Fund Plc E.J.F. Catton D.J. Hammond |
S. O'Sullivan | ||||
| Liontrust Diversity Fund Inc. and Liontrust Diversity General Partner Inc. | |||||
| E.J.F. Catton G. M. Harrison S. McMahon |
D. McGeough D.J. Sheppard |
||||
| Liontrust Sorbus Fund Inc. and Liontrust Sorbus General Partner Inc. E.J.F. Catton G. M. Harrison S. McMahon |
D. McGeough D.J. Sheppard |
LIONTRUST ASSET MANAGEMENT PLC 2 SAVOY COURT, LONDON WC2R 0EZ TELEPHONE: +44 (0)20-7412 1700 FACSIMILE: +44 (0)20-7412 1779 E-MAIL: [email protected] WEB SITE: WWW.LIONTRUST.CO.UK
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.