Liontrust Asset Management PLC

Annual / Quarterly Financial Statement • Jun 19, 2014

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RNS Number : 9734J

Liontrust Asset Management PLC

19 June 2014

Embargoed until 0700 hours, Thursday 19 June 2014

LIONTRUST ASSET MANAGEMENT PLC

FULL YEAR RESULTS FOR THE YEAR ENDED 31 MARCH 2014

Liontrust Asset Management Plc ("Liontrust", the "Company", or the "Group"), the independent fund management group, today announces its results for the year ended 31 March 2014.

Results:

·     Revenues up 39% compared to the same period last year

·     Adjusted profit before tax of £8.4 million (2013: £3.8 million), an increase of 122%

·     Adjusted diluted earnings per share of 15.2 pence per share (2013: 7.3 pence per share), an increase of 110%

·     Profit before tax of £3.7 million (2013: Loss of £3.9 million), includes costs of £4.7 million (2013: £7.7 million) relating to the amortisation of the related intangible asset and other non-cash and non-recurring costs (see note 4 below)

Dividend:

·     Second Interim dividend per share of 2.0 pence (2013: 1.0 pence) brings the total dividend per share for the financial year ending 31 March 2014 to 3.0 pence (2013: 1.0 pence), an increase of 200%

Assets under management:

·     On 31 March 2014, assets under management were £3.6 billion (2013: £3.0 billion), an increase of 19%

Flows:

·     Net inflows for the year to 31 March 2014 of £381 million (2013: £514 million)

Commenting on the results, John Ions, Chief Executive, said:

"It has been a very successful year for Liontrust. Among the highlights are assets under management increasing by 19% to £3.6 billion, a further four quarters of net inflows, adjusted profit before tax rising 122% to £8.4 million, adjusted operating margin increasing by 51% to 30%, net cash growing 55% to £12 million and revenues increasing 39%.

"This success has led to Liontrust returning to the FTSE All Share on 23 June and has enabled the Company to declare a second interim dividend of 2.0 pence per share and a total for the financial year of 3.0 pence per share.

"A key contributor to the growth of the business has been our continued excellent long-term performance across the fund management teams. The strength of our UK equity proposition is particularly impressive. Liontrust Special Situations Fund, for example, is ranked 4th out of 194 funds in the IMA UK All Companies sector since launch (10 November 2005) to 31 May 2014. Liontrust Macro Equity Income Fund is ranked 3rd out of 48 funds in the IMA UK Equity Income sector since launch (31 October 2003) to the same date (Source: Financial Express, total return, bid-to-bid retail class).

"Two other important drivers for a fund management company are distribution and brand awareness. We have continued to broaden our client base and raise our profile over the past year, as shown by Standard Life choosing Liontrust to be one of the key fund management groups they are promoting through their account managers. Our entry into multi-asset/multi-manager through the acquisition of North Investment Partners Limited enables us to offer solutions to the wider adviser market and access one of the fastest growing asset classes.

"We will benefit as well from the tailwinds pushing the fund management sector as a whole. One of the most prominent is the fact that the ageing population is having to take more responsibility for their pre and post-retirement investment planning. This opportunity was enhanced still further with the announcement in the Budget that the obligation to buy an annuity will be removed. We are well positioned to take advantage of this with our strong range of equity income funds, our multi-asset/multi-manager proposition and our expanding sales in the retail market.

"We can look forward with great confidence given the opportunities I have outlined here and the success we have had over the past four years in building the Company. We have six good quality fund management teams, distinct and rigorous investment processes, a client focused business and a growing profile."

For further information please contact:

Liontrust Asset Management                                                     020 7412 1700

John Ions, Vinay Abrol                                                                   www.liontrust.co.uk

Simon Hildrey - Head of Marketing & Communications

Numis Securities Limited                                                             020 7260 1000

Charles Farquhar, Andrew Holloway

Chairman's Statement

Introduction

I am delighted to report a year of significant growth and development for Liontrust and the fact we have once again met key strategic objectives of delivering outperformance, effective distribution and a growth in profitability.

We continue to deliver excellent long-term fund performance, with six of our actively managed UK Retail Funds, for example, in the first quartile of their respective IMA sectors since launch or since fund manager inception to 31 March 2014.

We have expanded our fund management expertise through the acquisition of North Investment Partners Limited in October 2013, which has brought our number of fund management teams to six and enabled us to move into the strategically important multi-asset/multi-manager space. We believe demand for multi-asset and multi-manager will continue to grow from financial advisers and private investors, especially among the post-retirement market following the government's recently announced annuity reforms. These pension changes could lead to fund managers attracting billions of pounds in extra flows every year.

Positive awareness about Liontrust and our funds among financial intermediaries has continued to grow. This is demonstrated by another four quarters of net inflows of £381 million in the financial year, which contributed to our near 20% increase in assets under management to £3.6 billion, and our ability to attract nearly 200 professional advisers to our September 2013 Income Roadshow and another 200 to our Annual Investment Conference in January this year.

In spite of this growth, Liontrust, like all other fund management companies, is not immune to our economic and political environment. The results of the European elections were recently announced and UKIP gave all the main UK political parties a bloody nose. Our nearest European neighbour - France - has been flirting with a toxic mixture of socialism and introspective legislation to protect its economy from the real world. With our General Election less than 12 months away, it is to be hoped that the economic policies of France, which have resulted in unemployment rates of 10% of the overall population and 25% among the under 25s, will guide the UK voters' hand. After all, no economy has ever taxed its way to growth.

It has been a good year for your company and I would like to thank all our staff for their efforts and, while the fund management industry is an ever changing landscape, I hope and expect to be able to report another successful year in 2015.

Results

Adjusted profit before tax was £8.352 million (2013: £3.766 million). Adjusted profit (or loss) before tax is disclosed in order to give shareholders an indication of the profitability of the Group excluding non-cash (depreciation, intangible asset amortisation and share incentivisation related) expenses and non-recurring (acquisition, cost reduction, restructuring, share incentivisation and severance compensation related) expenses ("Adjustments"), see note 4 below for a reconciliation of adjusted profit (or loss) before tax.          

Profit before tax of £3.678 million (2013: Loss of £3.935 million) includes a loss of £4.674 million (2013: £7.701 million) of Adjustments.

Dividend

The success in fund performance and distribution has resulted in an increase in revenues of 39% and a more than doubling of our adjusted profit before tax to £8.4 million. This has enabled the Board to declare a second interim dividend of 2.0 pence per share (2013: 1.0 pence) which will be payable on 30 July 2014 to shareholders who are on the register as at 4 July 2014, the shares going ex-dividend on 2 July 2014. The total dividend for the financial year ending 31 March 2014 is 3.0 pence per share (2013: 1.0 pence per share).

Directorate changes

Glyn Hirsch will be stepping down from the board at the Company's Annual General Meeting in September 2014. He now finds that he is unable to give us the time required to fulfil his role as a Non-executive Director of the Company and I am sad to see him go. I have enjoyed working with him and his tireless energy and input will be missed. We wish him well.

With effect from 19 June 2014, Mike Bishop becomes our Senior Independent Director.

Adrian Collins

Chairman

Chief Executive's Statement

Introduction

Liontrust has delivered another year of expansion with net inflows of £381 million. It is particularly pleasing that we have experienced net inflows across four of our fund management teams which is recognition of the strong long-term performance we have been producing. It also shows the benefit of focusing on those asset classes where we have the expertise to add value, having fund managers with the courage of their convictions and distinct and rigorous investment processes.

The hard work of the past four years in developing our distribution capability and reach, client engagement and raising our profile is also bearing fruit. The addition of the multi-asset/multi-manager team of John Husselbee and Paul Kim is enabling us to access the wider adviser market and meet the increasing demand for investment solutions.  

Assets under Management

On 31 March 2014, our assets under management ("AuM") stood at £3,613 million and were broken down by type and process as follows:-

Process	Total	Institutional	UK Retail	DPMS	Offshore Funds
	(£m)	(£m)	(£m)	(£m)	(£m)
Cashflow Solution	860	552	305	-	3
Economic Advantage	1,826	-	1,813	-	13
Macro Thematic	650	76	574	-	-
Credit	55	-	-	-	55
Asia	23	-	23	-	-
Multi-Asset	143	29	-	114	-
Indexed	56	-	56	-	-
Total	3,613	657	2,771	114	71

Fund Flows

Liontrust has recorded net inflows of £381 million in the year (2013: £569 million). A reconciliation of fund flows and AuM over the year is as follows:-

	Total	Institutional	UK Retail	DPMS	Offshore Funds
	£m	£m	£m	£m	£m
Opening AuM - 1 April 2013	3,039	501	2,263	-	275
Net flows*	381	109	293	111	(132)
Market and Investment performance	193	47	215	3	(72)
Closing AuM - 31 March 2014	3,613	657	2,771	114	71

* The figures for "Net flows" include £123 million relating to Discretionary Portfolio Management Service ('DPMS') and Institutional assets that came with the recruitment of the Multi-Asset team and the acquisition of North Investment Partners Limited.

Outlook

We are excited about the opportunities for Liontrust over the next few years. The long-term savings market can only grow as the ageing population is required to take more responsibility for funding their own retirement. The government's recent announcement that they will remove the obligation on individuals to buy an annuity with their pension fund presents the fund management industry with the opportunity to offer investment solutions to the post-retirement market. We are ideally placed to attract assets from this market with our equity income franchise encompassing UK, Asia and Global funds and our experienced multi-asset/multi-manager team.  

We see significant opportunities as well for distribution internationally, which until now has only contributed around 5% of our sales. We have been building our Dublin range of funds in anticipation of an expansion outside the UK.

I am confident we will continue to grow Liontrust's profits and AuM given our excellent long-term investment performance, the distribution capability we have been developing and the opportunities for the long-term savings industry in general.

John Ions

Chief Executive

Extracts from the Strategic Report

UK Retail fund performance

Detailed quartile rankings by fund over one, three and five years and since launch or the fund manager was appointed are shown in the table below:

	Quartile ranking - 1 year	Quartile ranking - 3 year	Quartile ranking - 5 year	Quartile ranking - Since Manager tenure	Launch / Manager appointed/Change in Objective
Liontrust Global Income Fund*	-	-	-	2	01/08/2013
Liontrust UK Growth Fund	4	2	2	2	25/03/2009
Liontrust Special Situations Fund	3	1	1	1	11/11/2005
Liontrust UK Smaller Companies Fund	2	1	1	1	08/01/1998
Liontrust European Growth Fund	4	4	2	1	15/11/2006
Liontrust Asia Income Fund	3	-	-	1	05/03/2012
Liontrust Macro Equity Income Fund	2	3	2	1	31/10/2003
Liontrust Macro UK Growth Fund	2	3	3	1	01/08/2002

Source: Financial Express, total return, bid to bid, to 31 March 2014 unless otherwise stated.  The above funds are all UK authorised unit trusts (retail share class).  Liontrust FTSE 100 Tracker Fund (index fund) not included. Past performance is not a guide to the future; the value of investments and the income from them can fall as well as rise. Investors may not get back the amount originally subscribed.

*Liontrust Global Income Fund's investment objective and policy changed to allow the fund managers to select companies on a global basis. The fund moved into the IMA Global Equity Income sector on 1 August 2013.

Consolidated Statement of Comprehensive Income

For the year ended 31 March 2014

					Year	Year
					ended	ended
					31-Mar-14	31-Mar-13
				Notes	£'000	£'000
Continuing Operations
Revenue					28,459	20,446
Cost of sales					(87)	(105)
Gross profit					28,372	20,341
Realised loss on sale of financial assets					-	(6)
Administration expenses				3	(24,636)	(24,051)
Operating profit/(loss)					3,736	(3,716)
Interest receivable					23	9
Interest payable					(81)	(228)
Profit/(loss) before tax					3,678	(3,935)
Taxation					(1,208)	(19)
Profit/(loss) for the year					2,470	(3,954)
Other comprehensive income:
Gain on financial assets net of tax					-	(6)
Realised gain on sale of financial assets taken to the statement of comprehensive income					-	6
Other Comprehensive income for the year, net of tax					-	-
Total comprehensive income					2,470	(3,954)
					Pence	Pence
Earnings per share
Basic				5	6.57	(11.20)
Diluted				5	5.85	(10.04)

The notes 1 to 6 form an integral part of this condensed consolidated financial information.

Consolidated Balance Sheet

As at 31 March 2014

					31-Mar-14	31-Mar-13
					£'000	£'000
Assets
Non current assets
Intangible assets					7,446	10,098
Property, plant and equipment					265	184
Deferred tax assets					1,228	1,757
					8,939	12,039
Current assets
Trade and other receivables					31,328	31,123
Financial assets					703	131
Cash and cash equivalents					15,273	10,483
Total Current assets					47,304	41,737
Liabilities
Non current liabilities
Convertible unsecured loan stock - Loan component					-	(2,621)
					-	(2,621)
Current liabilities
Trade and other payables					(34,645)	(33,994)
Corporation tax payable					(670)	-
Total Current liabilities					(35,315)	(33,994)
Net current assets					11,989	7,743
Net assets					20,928	17,161
Shareholders' equity attributable to owners of the parent
Ordinary shares					424	398
Share premium					17,692	14,692
Capital redemption reserve					19	15
Convertible unsecured loan stock - Equity component					-	479
Retained earnings					15,020	13,779
Own shares held					(12,227)	(12,202)
Total equity					20,928	17,161

The notes 1 to 6 form an integral part of this condensed consolidated financial information.

Consolidated Cash Flow Statement

For the year ended 31 March 2014

						Year	Year
						ended	ended
						31-Mar-14	31-Mar-13
						£'000	£'000
Cash flows from operating activities
Cash received from operations						35,581	27,782
Cash paid in respect of operations						(28,789)	(26,592)
Net cash received from changes in unit trust receivables and payables						311	3,153
Net cash used in operations						7,103	4,343
Interest received						23	9
Tax received						-	-
Net cash used in operating activities						7,126	4,352
Cash flows from investing activities
Purchase of property and equipment						(146)	(97)
Acquisitions						(228)	(12,240)
Purchase of seeding investments						(42)	(267)
Sale of seeding investments						-	308
Net cash used in investing activities						(416)	(12,296)
Cash flows from financing activities
Issue of new shares						3,030	3,167
Purchase of own shares						(1,019)	-
Issue of convertible unsecured loan stock						-	4,000
Conversion convertible unsecured loan stock						(3,030)	(900)
Repayment of convertible unsecured loan stock						(70)	-
Interest payable on Convertible Loan						(81)	(228)
Dividends paid						(750)	-
Net cash (used in)/from financing activities						(1,920)	6,039
Net increase/(decrease) in cash and cash equivalents						4,790	(1,905)
Opening cash and cash equivalents*						10,483	12,388
Closing cash and cash equivalents						15,273	10,483

* Cash and cash equivalents consists only of cash balances.

Consolidated Statement of Change in Equity

For the year ended 31 March 2014

		Share	Share	Capital	Loan	Retained	Own shares	Total
		capital	premium	redemption	equity	earnings	held	Equity
					element
		£ '000	£ '000	£ '000	£ '000	£ '000	£ '000	£ '000
Balance at 1 April 2013 brought forward		398	14,692	15	479	13,779	(12,202)	17,161
Profit for the year		-	-	-	-	2,470	-	2,470
Dividends paid		-	-	-	-	(750)	-	(750)
Total comprehensive income for the period		-	-	-	-	1,720	-	1,720
Net losses as part of the acquisition of North Investment Partners Ltd		-	-	-	-	(202)	-	(202)
Conversion of Convertible unsecured loan stock -  Equity component		-	479	-	(479)	-	-	-
Shares issued		26	2,521	4	-	-	-	2,551
Purchase of own shares		-	-	-	-	(994)	(25)	(1,019)
Equity share options issued		-	-	-	-	717	-	717
Balance at 31 March 2014		424	17,692	19	-	15,020	(12,227)	20,928

Consolidated Statement of Change in Equity

For the year ended 31 March 2013

		Share	Share	Capital	Loan	Retained	Own shares	Total
		capital	premium	redemption	equity	earnings	held	Equity
					element
		£ '000	£ '000	£ '000	£ '000	£ '000	£ '000	£ '000
Balance at 1 April 2012 brought forward		371	11,552	15	-	17,073	(12,172)	16,839
Loss for the period		-	-	-	-	(3,954)	-	(3,954)
Total comprehensive income for the period		-	-	-	-	(3,954)	-	(3,954)
Addition of Convertible unsecured loan stock -  Equity component		-	-	-	479	-	-	479
Shares issued		27	3,140	-	-	-	-	3,167
Purchase of own shares		-	-	-	-	-	(30)	(30)
Equity share options issued		-	-	-	-	660	-	660
Balance at 31 March 2013		398	14,692	15	479	13,779	(12,202)	17,161

Notes to the Financial Statements

1.    Accounting policies

The Group's accounting policies are consistent with those set out in the Report and Accounts for the year ended 31 March 2013.    

2.    Segmental reporting

The Group's operates only in one business segment - Investment management.                                            

The Group offers different fund products through different distribution channels. All financial, business and strategic decisions are made centrally by the Board, which determines the key performance indicators of the Group. The Group reviews financial information presented at a Group level. The Board, is therefore, the chief operating decision-maker for the Group. The information used to allocate resources and assess performance is reviewed for the Group as a whole. On this basis, the Group considers itself to be a single-segment investment management business.                                           

3.    Administration expenses from Continuing Operations

	Year ended	Year ended
	31-Mar-14	31-Mar-13
	£'000	£'000
Employee related expenses
Director and employee costs	2,375	1,860
Pensions	122	27
Share incentivisation expense	867	722
Severance compensation	99	191
	3,463	2,800
Non-employee related expenses
Members drawings charged as an expense	11,312	10,127
Restructuring (member related)	-	572
Restructuring (acquisition related and other)	576	598
Acquisition related expenses	333	1,738
Depreciation and Intangible asset amortisation	2,717	3,276
Convertible loan repurchase	82	-
Financial Services Compensation Scheme Levy	-	73
Other administration expenses	6,153	4,867
	24,636	24,051

4.    Adjusted profit before tax

Adjusted profit before tax is disclosed in order to give shareholders an indication of the profitability of the Group, non-cash (depreciation, intangible asset amortisation and share incentivisation related) expenses and non-recurring (acquisition, cost reduction, restructuring, share incentivisation and severance compensation related) expenses ("Adjustments"), and is reconciled in the table below.

	Year ended	Year ended
	31-Mar-14	31-Mar-13
	£'000	£'000
Profit/(loss) for the year	2,470	(3,954)
Taxation on Continuing Operations	1,208	19
Profit/(loss) before tax from Continuing Operations	3,678	(3,935)
Share incentivisation expense	867	722
Severance compensation	99	191
Restructuring (member related)	-	572
Restructuring (acquisition related and other)	576	598
Acquisition related expenses	333	1,738
Financial Services Compensation Scheme Levy	-	73
Convertible loan repurchase	82	-
Members' advance drawings	-	531
Depreciation and Intangible asset amortisation	2,717	3,276
Adjustments	4,674	7,701
Adjusted profit/(loss) before tax	8,352	3,766
Interest receivable	(23)	(9)
Interest payable	81	228
Adjusted operating profit	8,410	3,985
Adjusted basic earnings per share*	17.10	8.11
Adjusted diluted earnings per share*	15.24	7.27

* Assumes a tax rate of 23% (2013: 24%)

5.    Earnings per share

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 37,617,940 for the year (2013: 35,289,555). 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 2014. The adjusted weighted average number of Ordinary Shares so calculated for the year was 42,200,524 (2013: 39,385,949). This is reconciled to the actual weighted number of Ordinary Shares as follows:                                                           

	2014	2013
	number	number
Weighted average number of Ordinary Shares	37,617,940	35,289,555
Weighted average number of dilutive Ordinary shares under option:
- to the Liontrust Senior Incentive Plan	2,986,487	99,153
- to the Liontrust Incentive Plan	199,099	198,305
- to the Liontrust Option Plan	34,884	4,415
- to the Deferred Bonus and Variable Allocation Plan	10,552	-
Dilutive effect of shares from CULS	1,351,562	3,794,521
Adjusted weighted average number of Ordinary Shares	42,200,524	39,385,949

6.    Acquisition of North Investment Partners Limited

On 15 October 2013, Liontrust Asset Management Plc ("Liontrust") announced that it had entered into a conditional share purchase agreement (the "SPA") to purchase the entire issued ordinary share capital of North Investment Partners Limited ("North") from the existing North shareholders. The purchase completed on 15 October 2013. On the 1 March 2014 North was renamed Liontrust Investment solutions Limited.                          

Forward Looking Statements                                                                                    

This preliminary announcement constitutes non-statutory accounts under section 435 of the Companies Act 2006. The financial information for the year ended 31 March 2013 has been abridged from the financial statements which received an unqualified audit report and which has been filed with the Registrar of Companies and did not contain a statement under section 498(2) or (3) of the Companies Act, 2006.

The Annual Report is expected to be posted to shareholders on or around 5 July 2014.

The release, publication, transmission or distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore persons in such jurisdictions into which this announcement is released, published, transmitted or distributed should inform themselves about and observe such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities laws of any such jurisdiction.

This Full Year Results announcement contains certain forward-looking statements with respect to the financial condition, results of operations and businesses and plans of the Group. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that have not yet occurred. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. As a result, the Group's actual future financial condition, results of operations and business and plans may differ materially from the plans, goals and expectations expressed or implied by these forward-looking statements.  Liontrust undertakes no obligation publicly to update or revise forward-looking statements, except as may be required by applicable law and regulation (including the Listing Rules of the Financial Conduct Authority).  Nothing in this announcement should be construed as a profit forecast or be relied upon as a guide to future performance.

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