Liontrust Asset Management PLC

Interim / Quarterly Report • Nov 11, 2014

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RNS Number : 6522W

Liontrust Asset Management PLC

11 November 2014

Embargoed until 0700 hours, Tuesday 11 November 2014

LIONTRUST ASSET MANAGEMENT PLC

HALF YEARLY REPORT FOR THE SIX MONTHS ENDED

30 SEPTEMBER 2014

Liontrust Asset Management Plc ("Liontrust", the "Company", or the "Group"), the independent fund management group, today announces its Half Yearly Report for the six months ended 30 September 2014.

Results:

·     Revenues up 17% compared to the same period last year

·     Adjusted profit before tax of £5.1 million (2013: £3.8 million), an increase of 32%

·     Adjusted diluted EPS of 9.0p per share (2013: 7.0 pence per share), an increase of 29%

·     Profit before tax of £3.2 million (2013: £1.3 million)

Dividend:

·     Interim dividend of 2.0 pence per share payable on 19 December 2014, the shares going ex-dividend on 20 November 2014 (2013: 1.0 pence per share), an increase of 100%

Assets under management:

·     On 30 September 2014, assets under management were £3.8 billion (2013: £3.4 billion)

·     Close of business on 7 November 2014, assets under management were £4.2 billion

Fund flows:

·     Net inflows for the six months to 30 September 2014 of £284 million (2013: £315 million)

·     Liontrust awarded a UK equity income segregated mandate of £314 million which was funded in October 2014 and is included in the assets under management as at 7 November 2014 and will be included in the inflows for the current quarter

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

"I am pleased with the progress we have made in the first six months of the financial year, both through the continued growth of the business and the investment we have made to help propel our future expansion.

"We have now recorded seventeen consecutive quarters of net inflows, with the first half of this year totalling £284 million and increasing our AuM by 6% to reach £3.8 billion. Our AuM has since grown to £4.2 billion during the third quarter, which includes the £314 million UK equity income mandate granted to the Macro-Thematic team. They have joined the Economic Advantage team in managing more than £1 billion in assets across the funds and mandates they run, showing the diversification in fund management capability we have been developing at Liontrust.

"This is pleasing given that in September 2014, according to the Investment Management Association ("IMA"), retail sales across the industry fell to their lowest level since January 2013. We have delivered net inflows despite the IMA's UK All Companies sector suffering net outflows of £258 million in September. 

"The significant investment and improvements in our sales and marketing have been a key driver behind our growth. We continue to develop our strong distribution platform and will have implemented a new CRM system and website by the end of the year. This will enables us to improve still further the high standards of customer service we have set ourselves including through more personalised communications to clients.

"As part of this, we have reorganised UK distribution with Simon Hildrey becoming responsible for the sales and marketing strategy to ensure we have complete alignment across distribution. We have also recruited James Beddall to work alongside Jonathan Hughes-Morgan as Co-Head of International Sales.

"All these developments give me great confidence about continued progress during the second half of our financial year."

For further information please contact:

Liontrust Asset Management                                                     020 7412 1700

John Ions                                                                                             www.liontrust.co.uk

Vinay Abrol

Simon Hildrey - Head of Marketing & Distribution Strategy

Numis Securities Limited                                                             020 7260 1000

Charles Farquhar, Andrew Holloway

Chairman's Statement

Introduction

I am delighted to announce very good results for the first six months of our financial year. Our revenues have increased by 17% compared to the first half of the last financial year and our adjusted profit before tax has grown by 32% to £5.1 million. Our earnings and profits have been driven by the continued growth in our AuM, which reached £3.8 billion at the end of September and more than £4.2 billion on 7 November.

Fund management is a very competitive industry with yet more new entrants appearing in the UK in the past few months and a number of high-profile managers moving between asset managers over the past year. The industry, however, also benefits from a number of tailwinds, particularly the greater need for people to manage their savings to ensure a financially comfortable retirement and the opening up of the post-retirement market following the reforms to annuities announced by the government earlier this year.

We are growing a successful business by focusing on those asset classes where we have fund management expertise, fund managers with robust investment processes and the courage of their convictions and providing an environment where managers can focus on running money. The predictability of how managers run money is especially important at a time of political uncertainty and risk that we are facing in the lead up to next year's general election. Our excellent long-term performance is evidence that this approach is successful.

Added to this is our strong distribution capability, which has expanded its focus internationally to broaden significantly our potential client base, and a high quality back office. We have strong brand awareness in the intermediary market, which was demonstrated by the fact we attracted 300 wealth managers and advisers to attend our Income Roadshow across England, Scotland and Wales in September.

This all shows we are well positioned to take advantage of the long-term opportunities for fund management companies and to succeed in continuing to grow the business despite the competition. 

Results

Adjusted profit before tax was £5.081 million (2013: £3.842 million) an increase of 32%, see note 5 below for a reconciliation of adjusted profit before tax.      

Adjusted basic earnings per share of 9.73 pence (2013: 8.10 pence per share) an increase of 20% and Adjusted diluted earnings per share of 9.00 pence per share (2013: 6.97 pence per share) an increase of 29%.

Profit before tax of £3.236 million (2013: £1.277 million - restated, see note 12 - Prior period adjustment) includes a loss of £1.859 million (2013: £2.565 million) of Adjustments.

Dividend

In accordance with the Company's dividend policy, the Board is declaring an interim dividend of 2.0 pence per share (2013: 1.0 pence per share), which will be payable on 19 December 2014 to shareholders who are on the register as at 21 November 2014, the shares going ex-dividend on 20 November 2014.

Assets under management

On 30 September 2014, our assets under management ("AuM") stood at £3,818 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	563	291	-	6
Economic Advantage	1,892	-	1,862	-	30
Macro-Thematic	691	69	611	-	11
Global Credit	49	-	-	-	49
Asia	27	-	27	-	-
Multi-Asset	245	91	-	154	-
Indexed	54	-	54	-	-
Total	3,818	723	2,845	154	96

AuM as at close of business on 7 November 2014 were £4,215million.

Fund Flows

Liontrust has recorded net inflows of £284 million in the six months to 30 September 2014 (2013: £315 million).

A reconciliation of fund flows and AuM over the half year is as follows:-

	Total	Institutional	UK Retail	DPMS*	Offshore Funds
	£m	£m	£m	£m	£m
Opening AuM - 1 April 2014**	3,613	657	2,752	114	90
Net flows	284	62	176	37	9
Market and Investment performance	(79)	4	(83)	3	(3)
Closing AuM - 30 September 2014	3,818	723	2,845	154	96

* Discretionary Portfolio Management Services

** Opening AuM for UK Retail and Offshore Funds have been adjusted by £19m in relation to reclassification of AuM that moved to our offshore funds from our UK funds.

Fund Performance (Quartile ranking) and Awards

The strength of Liontrust's fund management capability is shown by the fact that all bar one of its actively managed unit trust funds are in the first quartile since launch or since the fund managers were appointed to 30 September 2014.

In October 2014, the Liontrust UK Smaller Companies Fund was named the UK Smaller Companies Fund of the Year by Investment Adviser magazine as part of their 100 Club.

	Quartile ranking - 1 year	Quartile ranking - 3 year	Quartile ranking - 5 year	Quartile ranking - Since Manager tenure	Launch / Manager appointed
Liontrust UK Growth Fund	2	3	1	1	25/03/2009
Liontrust Special Situations Fund	3	2	1	1	11/11/2005
Liontrust UK Smaller Companies Fund	1	1	1	1	08/01/1998
Liontrust European Growth Fund	2	4	2	1	15/11/2006
Liontrust Global Income Fund	4	-	-	1	03/07/2013
Liontrust Asia Income Fund	4	-	-	2	05/03/2012
Liontrust Macro Equity Income Fund	1	3	2	1	31/10/2003
Liontrust Macro UK Growth Fund	1	4	3	1	01/08/2002

Source: Financial Express, total return, bid to bid, to 30 September 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.

Outlook

We are facing greater economic, market and political uncertainty which, as we have seen recently, has the potential to unsettle investors. Our commitment to investors is that our investment processes ensure the way we manage money is predictable and repeatable which stands us and our clients in good stead in the current environment. We are confident that with our experienced fund management teams who have strong long-term track records and clear, documented processes we will continue to grow our business over the coming months and years.

Adrian Collins

Chairman

Consolidated Statement of Comprehensive Income

Six months ended 30 September 2014

			Six	Six	Year
			months to	months to	ended
			30-Sep-14	30-Sep-13	31-Mar-14
			(unaudited)	(unaudited)	(audited)
				restated	restated
		Notes	£'000	£'000	£'000
Continuing operations
Revenue		3	15,846	13,616	28,459
Cost of sales			(31)	(48)	(87)
Gross profit			15,815	13,568	28,372
Administration expenses		4	(12,593)	(12,218)	(25,089)
Operating profit from Continuing Operations			3,222	1,350	3,283
Interest receivable			14	7	23
Interest payable			-	(80)	(81)
Profit before tax from Continuing Operations			3,236	1,277	3,225
Taxation		6	(48)	(424)	(1,104)
Profit for the period			3,188	853	2,121
Total comprehensive income			3,188	853	2,121
			Pence	Pence	Pence
Basic earnings per share		7	7.71	2.34	5.64
Diluted earnings per share		7	7.41	2.01	5.03

Consolidated Balance Sheet

As at 30 September 2014

			30-Sep-14	30-Sep-13	31-Mar-14
			(unaudited)	(unaudited)	(audited)
		Notes	£'000	£'000	£'000
				restated	restated
Assets
Non current assets
Intangible assets		8	6,222	8,723	7,446
Property, plant and equipment			236	248	265
Deferred tax assets			1,180	1,426	1,228
			7,638	10,397	8,939
Current assets
Trade and other receivables			24,972	22,453	31,328
Financial assets		9	732	479	703
Cash and cash equivalents			12,903	10,444	15,273
Total current assets			38,607	33,376	47,304
Liabilities
Current liabilities
Trade and other payables			(24,570)	(24,615)	(35,635)
Corporation tax payable			-	-	(437)
Total current liabilities			(24,570)	(24,615)	(36,072)
Net current assets			14,037	8,761	11,232
Net assets			21,675	19,158	20,171
Shareholders' equity
Ordinary shares			454	424	424
Share premium			17,692	17,692	17,692
Capital redemption reserve			19	19	19
Retained earnings			13,285	13,250	14,263
Own shares held			(9,775)	(12,227)	(12,227)
Total equity			21,675	19,158	20,171

Consolidated Cash Flow Statement

Six months ended 30 September 2014

	Six	Six	Year
	months to	months to	ended
	30-Sep-14	30-Sep-13	31-Mar-14
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Cash flows from operating activities
Cash inflow from operations	20,634	20,216	35,581
Cash outflow from operations	(17,626)	(19,237)	(28,789)
Cash (outflow)/inflow from changes in unit trust receivables and payables	(2,728)	674	311
Net cash from operations	280	1,653	7,103
Interest received	16	3	23
Tax paid	(658)	(94)	-
Net cash (used in)/from operating activities	(362)	1,562	7,126
Cash flows from investing activities
Purchase of property and equipment	(12)	(78)	(146)
Acquisitions	-	-	(228)
Sale of seeding investments	-	50	-
Purchase of seeding investments	(163)	(42)	(42)
Net cash used in investing activities	(175)	(70)	(416)
Cash flows from financing activities
Issue of new shares	30	3,030	3,030
Purchase of own shares	(543)	(1,019)	(1,019)
Purchase of MCI's	(461)	-	-
Conversion of unsecured loan stock	-	(3,030)	(3,030)
Repayment of convertible unsecured loan stock	-	(70)	(70)
Interest on unsecured loan stock	-	(80)	(81)
Dividends paid	(859)	(362)	(750)
Net cash used in financing activities	(1,833)	(1,531)	(1,920)
Net (decrease)/increase in cash and cash equivalents	(2,370)	(39)	4,790
Opening cash and cash equivalents*	15,273	10,483	10,483
Closing cash and cash equivalents	12,903	10,444	15,273

* Cash and cash equivalents consists only of cash balances.

Consolidated Statement of Change in Equity

Six months ended 30 September 2014

		Share	Share	Capital	Retained	Own shares	Total
		capital	premium	redemption	earnings	held	Equity
		£ '000	£ '000	£ '000	£ '000	£ '000	£ '000
Balance at 1 April 2014 brought forward		424	17,692	19	14,263	(12,227)	20,171
Profit for the period		-	-	-	3,188	-	3,188
Dividends paid		-	-	-	(859)	-	(859)
Total comprehensive income for the period		-	-	-	2,329	-	2,329
Shares issued		30	-	-	-	-	30
Purchase of own shares		-	-	-	-	(543)	(543)
Purchase of MCI's		-	-	-	(3,456)	2,995	(461)
Equity share options issued		-	-	-	149	-	149
Balance at 30 September 2014		454	17,692	19	13,285	(9,775)	21,675

Consolidated Statement of Change in Equity

Six months ended 30 September 2013

restated

		Share	Share	Capital	Loan Equity	Retained	Own shares	Total
		capital	premium	redemption	Element	earnings	held	Equity
		£ '000	£ '000	£ '000	£ '000	£ '000	£ '000	£ '000
Balance at 1 April 2013 brought forward		398	14,692	15	479	13,371	(12,202)	16,753
Profit for the period		-	-	-	-	853	-	853
Dividends paid		-	-	-	-	(362)	-	(362)
Total comprehensive income for the period		-	-	-	-	491	-	491
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		-	-	-	-	382	-	382
Balance at 30 September 2013		424	17,692	19	-	13,250	(12,227)	19,158

Consolidated Statement of Change in Equity

Year ended 31 March 2014

restated

		Share	Share	Capital	Convertible Loan Equity	Retained	Own shares	Total
		capital	premium	redemption	Element	earnings	held	Equity
		£ '000	£ '000	£ '000	£ '000	£ '000	£ '000	£ '000
Balance at 1 April 2013 brought forward		398	14,692	15	479	13,371	(12,202)	16,753
Profit for the period		-	-	-	-	2,121	-	2,121
Dividends paid		-	-	-	-	(750)	-	(750)
Total comprehensive income for the year		-	-	-	-	1,371	-	1,371
Net losses as part of the acquisition of North Investment Partners Limited		-	-	-	-	(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	-	14,263	(12,227)	20,171

Notes to the Financial Statements

1.    Principal accounting policies

This Half Yearly Report is unaudited and does not constitute statutory accounts within the meaning of s434 of the Companies Act 2006. The financial information for the half years ended 30 September 2014 and 2014 has not been audited or reviewed by the auditors pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information. The statutory accounts for the year ended 31 March 2014, which were prepared in accordance with International Financial Reporting Standards ("IFRS"), comprising standards and interpretations approved by either the International Accounting Standards Board or the International Financial Reporting Interpretations Committee or their predecessors, as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, have been delivered to the Registrar of Companies. The auditors' opinion on these accounts was unqualified and did not contain a statement made under s498 of the Companies Act 2006.            

The financial statements have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority ("DTR") and with IAS 34 'Interim Financial Reporting'.                                                            

The accounting policies applied in this Half Yearly Report are consistent with those applied in the Group's most recent annual accounts.                                             

The Group adopted the requirements the following Standards and Interpretations in issue.                                                                                     

IFRS 9                    Financial instruments                   

IFRS 10                  Consolidation                  

The Directors anticipate the adoption of these Standards and Interpretations will have no material impact on the financial statements of the Group.                                           

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.    Revenue from Continuing Operations

	Six	Six	Year
	months to	months to	ended
	30-Sep-14	30-Sep-13	31-Mar-14
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Revenue
- Revenue	15,846	13,616	28,459
- Performance fee revenue	-	-	-
Total Revenue	15,846	13,616	28,459

4.    Administration expenses from Continuing Operations

	Six	Six	Year
	months to	months to	ended
	30-Sep-14	30-Sep-13	31-Mar-14
	(unaudited)	(unaudited)	(audited)
		restated	restated
	£'000	£'000	£'000
Employee related expenses
Director and employee costs	1,339	1,000	2,375
Pension costs	65	62	122
Share incentivisation expense	206	708	879
Severance compensation	16	136	99
	1,626	1,906	3,475
Non employee related expenses
Members' drawings charged as an expense	5,967	5,516	11,312
Restructuring (acquisition related and other)	223	100	576
Acquisition related expenses	-	-	333
Members' share incentivisation expense	149	217	441
Depreciation, Intangible asset amortisation and impairment	1,265	1,404	2,717
Convertible Loan repurchase	-	-	82
Other administration expenses	3,363	3,075	6,153
Total administration expenses	12,593	12,218	25,089

5.    Adjusted profit before tax

Adjusted profit before tax is disclosed in order to give shareholders an indication of the profitability of the Group. Adjusted profit or loss is the total Group profit or loss excluding non-cash (depreciation, intangible asset amortisation and IFRS2 related expenses) expenses and non-recurring (cost reduction expenses, restructuring costs (member, acquisition related and other), acquisition related costs, disposal gains, integration costs, share incentivisation expenses, severance compensation and Financial Services Compensation Scheme Interim Levy) expenses ("Adjustments"), and is reconciled in the table below:                                 

	Six	Six	Year
	months to	months to	ended
	30-Sep-14	30-Sep-13	31-Mar-14
	(unaudited)	(unaudited)	(audited)
		restated	restated
	£'000	£'000	£'000
Profit for the period	3,188	853	2,121
Taxation on Continuing Operations	48	424	1,104
Profit before tax from Continuing Operations	3,236	1,277	3,225
Employee related share incentivisation expense	206	708	879
Member related share incentivisation expense	149	217	441
Severance compensation	16	136	99
Restructuring (acquisition related and other)	223	100	576
Acquisition related costs	-	-	333
Convertible Loan repurchase	-	-	82
Depreciation, Intangible asset amortisation and impairment	1,265	1,404	2,717
Adjustments	1,859	2,565	5,127
Adjusted profit before tax	5,095	3,842	8,352
Interest receivable	(14)	(7)	(23)
Interest payable	-	80	81
Adjusted operating profit	5,081	3,915	8,410
Adjusted basic earnings per share*	9.73	8.10	17.10
Adjusted diluted earnings per share*	9.00	6.97	15.24

* Assumes a tax rate of 21% (2013: 23%)

6.    Taxation

The half yearly tax charge has been calculated at the estimated full year effective UK corporation tax rate of 21% (2013: 23%).                                                    

7.    Earnings per share

The calculation of basic earnings per share is based on profit after taxation and the weighted average number of Ordinary Shares in issue for each period. The weighted average number of Ordinary Shares for the six months ended 30 September 2014 was 41,373,566 (30 September 2013: 36,511,363, 31 March 2014: 37,617,940). Shares held by the Liontrust Asset Management Employee Trust are not eligible for dividends and are treated as cancelled for the purposes of calculating earnings per share.                                                        

Diluted earnings per share is calculated on the same bases as set out above, after adjusting the weighted average number of Ordinary Shares for the effect of options to subscribe for new Ordinary Shares that were in existence during the six months ended 30 September 2014. The adjusted weighted average number of Ordinary Shares so calculated for the period was 43,047,922 (30 September 2013: 42,421,908, 31 March 2014: 42,200,524). This is reconciled to the actual weighted number of Ordinary Shares as follows:                                                            

	30-Sep-14	30-Sep-13	31-Mar-14
Weighted average number of Ordinary Shares	41,373,566	36,511,363	37,617,940
Weighted average number of dilutive Ordinary shares under option:
- to Liontrust Senior Incentive Plan	1,485,715	2,984,924	2,986,487
- to Liontrust Incentive Plan	132,789	198,995	199,099
- to Liontrust Option Plan	38,129	30,888	34,884
- to the Deferred Bonus and Variable Allocation Plan	17,723	-	10,552
Dilutive effect of shares from Convertible Unsecured Loan Stock	-	2,695,738	1,351,562
Adjusted weighted average number of Ordinary Shares	43,047,922	42,421,908	42,200,524

8.    Intangible assets

Intangible assets represent investment management contracts that have been capitalised upon acquisition and are amortised on a straight-line basis over a period of 5 years. The intangible asset on the balance sheet represents investment management contracts as follows:                                                

	30-Sep-14	30-Sep-13	31-Mar-14
	£'000	£'000	£'000
Contracts acquired from Occam Asset Management	-	53	-
Contracts acquired from Walker Crips Asset Managers Limited	6,222	8,670	7,446
	6,222	8,723	7,446

9.    Financial Assets

Assets held at fair value through profit and loss:                                                             

The Group's assets held at fair value through profit and loss represent units in the UK Authorised unit trusts held in the manager's box and are valued at bid price.                                                        

Assets held as available-for-sale                                                             

The Group's assets held as available-for-sale represent shares in the Liontrust GF Global strategic Bond Fund, the Liontrust GF Special Situations Fund, the Liontrust GF European Strategic Equity Fund, the Liontrust GF UK growth Fund, the Liontrust GF Macro Equity Income Fund and the Liontrust GF Global Income Fund (all sub-funds of Liontrust Global Funds Plc (an Irish Open ended investment company) and are valued at bid price).                                                       

10.  Related party transactions

During the six months to 30 September 2014 the Group received fees from unit trusts under management of £16,547,000 (2013: £15,817,000). Transactions with these unit trusts comprised creations of £342,262,000 (2013: £338,218,000) and liquidations of £159,584,000 (2013: £189,849,000). Directors can invest in unit trusts managed by the Group on commercial terms that are no more favourable than those available to staff in general. As at 30 September 2014 the Group owed the unit trusts £12,017,000 (2013: £9,671,000) in respect of unit trust creations and was owed £5,194,000 (2013: £6,191,000) in respect of unit trust cancellations and fees.                      

During the six months to 30 September 2014 remuneration paid to key decision makers (the Executive Directors) was  £500,000 (2013: £478,000).                                                                                          

11.  Key risks

The Directors have identified the risks and uncertainties that affect the Group's business and believe that they will be substantially the same for the second half of the year as the current risks as identified in the 2014 Annual Report.  These can be broken down into risks that are within the management's influence and risks that are outside it.                                                                                            

Risks that are within management's influence include areas such as the expansion of the business, prolonged periods of under-performance, loss of key personnel, human error, poor communication and service leading to reputational damage and fraud.                                                         

Risks outside the management's influence include falling markets, terrorism, a deteriorating UK economy, investment industry price competition and hostile takeovers.                                                                                                                                                                                                                                          

Management monitor all risks to the business, they record how each risk is mitigated and have warning flags to identify increased risk levels. Management recognise the importance of risk management and view it as an integral part of the management process which is tied into the business model and is described further in the Risk management and internal control section on page 26 of the 2014 Annual Report and Note 2 - Financial risk management on page 58 of the 2014 Annual Report.

12.  Prior period adjustment

In preparing the accounts for the 6 month period ended 30 September 2014, the Directors have adjusted the accounting for the prior period. On 1 February 2011, 3 million share options were awarded by the Company under the Liontrust Senior Incentive Plan with a three year vesting period. These vested on 1 February 2014. As at the Company's financial year end on 31 March the options had not been exercised and a contingent liability was disclosed for the National Insurance Contribution ('NIC') which would become payable on exercise. The options were all exercised on 1 July 2014.

Having reviewed the accounting treatment of the potential liability to pay NIC, the Directors have concluded that it would more appropriately be accounted for in accordance with IFRS2 'Share based payments' with a liability being accrued from the grant date by reference to the fair value of the underlying options together with related corporation tax adjustment. Accordingly the financial statements have been restated to reflect the liability and expense as set out below:

Consolidated Statement of Comprehensive Income				31-Mar-14	30-Sep-13
				Adjustment	Adjustment
				£'000	£'000
Administration expenses				453	457
Profit before tax from continuing operations				(453)	(457)
Taxation				104	105
Profit for the period				(349)	(352)
Basic Earnings per share				(0.93)	(0.96)
Diluted earnings per share				(1.82)	(0.83)
Consolidated Balance Sheet				31-Mar-14	30-Sep-13	01-Apr-13
				Adjustment	Adjustment	Adjustment
				£'000	£'000	£'000
Trade and other receivables				-	234	129
Trade and other payables				(990)	(994)	(537)
Corporation tax payable				233	-	-
Retained earnings				(757)	(760)	(408)

As the adjusted profit calculation removes the effect of the share option awards, this is unaffected by the adjustment. There is no impact on the cash flows of the Group or the Company in prior periods.

13.  Directors' responsibilities

The Directors confirm that this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union, and that the Half Yearly Report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8.

By Order of the Board

John S. Ions                                                        Vinay K. Abrol

Chief Executive                                                 Chief Operating Officer and Chief Financial Officer

11 November 2014

Forward Looking Statements                                                                                    

This report contains certain forward-looking statements with respect to the financial condition, results of operations and businesses and plans of the Group. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that have not yet occurred. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Nothing in this announcement should be construed as a profit forecast.

END

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