Earnings Release • Nov 15, 2016
Earnings Release
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RNS Number : 1489P
Liontrust Asset Management PLC
15 November 2016
Embargoed until 0700 hours, Tuesday 15 November 2016
HALF YEARLY REPORT FOR THE SIX MONTHS ENDED
30 SEPTEMBER 2016
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 2016.
Results:
· Revenues of £22.0 million (2015: £18.7 million) an increase of 18% compared to the same period last year
· Adjusted profit before tax1 of £6.8 million (2015: £5.9 million), an increase of 16%
· Adjusted diluted earnings per share1 of 11.9p per share (2015: 10.2 pence per share), an increase of 16%
· Profit before tax of £2.2 million (2015: £4.2 million) includes costs of £4.6 million (2015: £1.7 million) relating to the amortisation of the related intangible asset and other non-cash and non-recurring costs (see note 6 below)
Dividend:
· Interim dividend per share of 4.0 pence (2015: 3.0 pence) payable on 22 December 2016, an increase of 33%
Assets under management:
· On 30 September 2016, assets under management were £5.7 billion (2015: £4.4 billion)
· Close of business on 11 November 2016, assets under management were £5.6 billion
Flows:
· Net inflows for the six months to 30 September 2016 of £92 million (2015: £110 million)
Commenting on the results, John Ions, Chief Executive, said:
"We have continued to grow and enhance the Company over the first half of the financial year. On 30 September 2016, our assets under management reached £5.7 billion and we expanded our fund management capability through the acquisition of the European Income business from Argonaut Capital Partners LLP. This growth has led to an increase in our revenues and the interim dividend by 18% and 33% respectively.
"This expansion has come during a challenging period for fund management groups. The vote on 23 June in favour of Britain leaving the EU and the US Presidential election campaign have exacerbated significantly the political uncertainty this year and the industry has suffered negative sales of equity funds every month in 2016 among retail investors, with the UK All Companies sector being the worst net seller in six of the first nine months of the year. It is, therefore, pleasing that we have generated net positive flows over the last two quarters.
"We are building the Company through focusing on what we do well both in fund management and in running the business. We are staunch believers in the benefits of active fund management over the long term. Passive investments have a key role to play in investors' portfolios but, equally, so do highly skilled active fund managers who can generate outperformance over the long term by applying robust investment processes. It is not a simple either or argument.
"From launch in November 2006 to the end of October 2016, for example, the Liontrust European Growth fund returned 136.6% against 63.6% by the MSCI Europe ex-UK Index. From launch in November 2005 to the end of October 2016, the Liontrust Special Situations Fund returned 298.1% against 103.5% by the FTSE All Share Index.
"We are also focused on engaging with our investors, whether they are institutional investors, professional advisers or private investors. This is essential if we are really to understand their needs and objectives. At the end of January 2017, for example, we will be taking our Annual Investment Conference on the road where we expect our fund managers to present to around 350 intermediaries.
"A demonstration of how much progress we have made is the fact that we can attract someone of the calibre of Ian Chimes to join us as Head of Global Distribution in the New Year. The recruitment of Ian is a key part in the next stage of the development and expansion of Liontrust and is yet another reason why we are looking forward with confidence."
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
Macquarie Capital (Europe) Limited 020 3037 2000
Advisory - Jonny Allison, Kavita Choitram
Corporate Broking - Alex Reynolds, Nicholas Harland
Chairman's Statement
Introduction
I have been Chairman of Liontrust since 2009 and was Executive Chairman for six of those years until becoming Non-executive again in September 2016. I look back on the growth and development of Liontrust with great pride. I would like to thank my fellow directors, the fund managers and all the staff at Liontrust for their tremendous effort and contribution in making the Company successful.
The fruits of this work can be seen in Liontrust's results for the first six months of our financial year where our assets under management ("AuM") have increased by £900 million to £5.7 billion, our revenues have increased by 18% compared to the first half of the last financial year and our Adjusted profit before tax1 has grown by 16% to £6.8 million.
The process of creating a successful asset management company is not complicated yet it is far from simple to implement in practice. It requires excellent fund management teams, dedicated and focused distribution along with hard work and collaboration across the whole business. The need for high quality fund management, whether to generate growth, to provide a strong and regular flow of income or to offer a long-term savings solution to consumers, has never been greater. The challenges and opportunities for asset managers are arguably, therefore, greater than ever as well.
The development of Liontrust over the past six years under the leadership of John Ions has laid tremendous foundations for ensuring the Company is successful well into the future. We continue to diversify our fund management capability while focusing on those asset classes where we believe we have particular expertise. Our distribution is expanding in continental Europe to build on the success we have enjoyed in the UK over the past few years. We continue to develop brand awareness and engagement in the UK. We have been investing in the business, such as implementing a new dealing system, to ensure we can support further growth over the coming months and years.
We are well placed to withstand any external uncertainty or shocks, such as the unprecedented vote to leave the EU on 23 June 2016 and the unpredictable US Presidential election campaign in the first half of our financial year. This gives me great confidence, therefore, about the ability of Liontrust to continue to achieve our growth ambitions over the next six years.
Results
Adjusted profit before tax1 was £6.838 million (2015: £5.907 million) an increase of 16% compared to last year. Adjusted basic earnings per share1 of 12.14 pence (2015: 10.69 pence), an increase of 14% and Adjusted diluted earnings per share1 of 11.89 pence (2015: 10.22 pence), an increase of 16%.
Profit before tax of £2,245 million (2015: £4.235 million) includes a loss of £4.593 million (2015: £5,219 million) of Adjustments (see note 6 below).
Revenues of £22.0 million (2015: £18.7 million), an increase of 18%.
Dividend
In accordance with the Company's dividend policy, the Board is declaring an interim dividend per share of 4.0 pence (2015: 3.0 pence), which will be payable on 22 December 2016 to shareholders who are on the register as at 25 November 2016, the shares going ex-dividend on 24 November 2016.
Assets under Management
On 30 September 2016, our AuM stood at £5,685 million and were broken down by type and process as follows:-
| Process | Total | Institutional | UK Retail | MPS2 | Offshore Funds |
| (£m) | (£m) | (£m) | (£m) | (£m) | |
| Cashflow Solution | 747 | 491 | 227 | - | 29 |
| Economic Advantage | 3,192 | 215 | 2,930 | - | 47 |
| Macro-Thematic | 768 | 325 | 416 | - | 27 |
| European Income | 271 | - | 271 | - | - |
| Asia Income | 81 | - | 80 | - | 1 |
| Structural Opportunities | 24 | - | - | - | 24 |
| Multi-Asset | 553 | 324 | - | 229 | - |
| Indexed | 49 | - | 49 | - | - |
| Total | 5,685 | 1,355 | 3,973 | 229 | 128 |
On 11 November 2016, our AuM was £5.605 billion.
Fund Flows
Liontrust has recorded net inflows for the half year are £92 million (2015: £110 million). A reconciliation of fund flows and AuM over the half year is as follows:-
| Total | Institutional | UK Retail | MPS2 | Offshore Funds | |
| £m | £m | £m | £m | £m | |
| Opening AuM - 1 April 2016 | 4,791 | 1,138 | 3,330 | 204 | 119 |
| Net flows | 92 | 77 | 4 | 10 | 1 |
| Acquisitions | 272 | - | 272 | - | - |
| Market and Investment performance | 530 | 140 | 367 | 15 | 8 |
| Closing AuM - 30 September 2016 | 5,685 | 1,355 | 3,973 | 229 | 128 |
Fund Performance (Quartile ranking)
The strength of Liontrust's fund management capability is shown by the fact that all bar one of its actively managed unit trust funds have outperformed the average fund in their respective Investment Association sectors since launch or since the fund managers were appointed to 30 September 2016.
| Quartile ranking - Since Launch/Manager Appointed | Quartile ranking - 5 year | Quartile ranking - 3 year | Quartile ranking - 1 year | Launch Date/Manager Appointed | |
| Liontrust UK Growth Fund | 1 | 2 | 1 | 1 | 25/03/2009 |
| Liontrust Special Situations Fund | 1 | 1 | 1 | 1 | 10/11/2005 |
| Liontrust UK Smaller Companies Fund | 1 | 1 | 1 | 1 | 08/01/1998 |
| Liontrust UK Micro Cap Fund | 4 | - | - | - | 09/03/2016 |
| Liontrust Macro Equity Income Fund | 1 | 4 | 3 | 4 | 31/10/2003 |
| Liontrust Macro UK Growth Fund | 1 | 4 | 3 | 4 | 01/08/2002 |
| Liontrust European Income Fund | 3 | 3 | 3 | 4 | 15/12/2005 |
| Liontrust European Enhanced Income Fund | 3 | 4 | 3 | 4 | 30/04/2010 |
| Liontrust European Growth Fund | 1 | 2 | 1 | 1 | 15/11/2006 |
| Liontrust Asia Income Fund | 1 | - | 2 | 1 | 05/03/2012 |
| Liontrust Global Income Fund | 3 | - | 4 | 3 | 03/07/2013 |
Source: Financial Express, total return, bid to bid, net, to 30 September 2016 unless otherwise stated, data is accurate as at 1 October 2016. The above funds are all UK authorised unit trusts (primary share class). Liontrust FTSE 100 Tracker Fund (index fund) not included. 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 have made great progress over the past couple of years to put us in a very strong position to take advantage of the growing need for excellence in fund management in the UK and internationally. We have continued to diversify our fund management capability, we have expanded our equity income capability, we are strengthening further our distribution team and we have developed the infrastructure across all our departments to generate and manage our expansion. I am optimistic these developments will ensure we can continue to advance for the benefit of investors and shareholders.
Notes
1 See note 2 below for definitions of alternative performance measures; and
2 Managed Portfolio Services are where we act as discretionary fund manager to a range of model portfolios which are marketed to advisory intermediates in the UK.
Adrian Collins
Non-executive Chairman
Consolidated Statement of Comprehensive Income
Six months ended 30 September 2016
| Six | Six | Year | |||
| months to | months to | ended | |||
| 30-Sep-16 | 30-Sep-15 | 31-Mar-16 | |||
| (unaudited) | (unaudited) | (audited) | |||
| Notes | £'000 | £'000 | £'000 | ||
| Continuing operations | |||||
| Revenue | 4 | 22,043 | 18,708 | 44,991 | |
| Cost of sales | (25) | (26) | (51) | ||
| Gross profit | 22,018 | 18,682 | 44,940 | ||
| Gain/(loss)on financial assets | 104 | - | (1) | ||
| Administration expenses | 5 | (19,886) | (14,455) | (35,551) | |
| Operating profit | 2,236 | 4,227 | 9,388 | ||
| Interest receivable | 9 | 8 | 16 | ||
| Profit before tax | 2,245 | 4,235 | 9,404 | ||
| Taxation | 7 | (496) | (916) | (2,094) | |
| Profit for the period | 1,749 | 3,319 | 7,310 | ||
| Total comprehensive income | 1,749 | 3,319 | 7,310 | ||
| Pence | Pence | Pence | |||
| Basic earnings per share | 8 | 3.88 | 7.60 | 16.48 | |
| Diluted earnings per share | 8 | 3.80 | 7.27 | 16.06 |
Consolidated Balance Sheet
As at 30 September 2016
| 30-Sep-16 | 30-Sep-15 | 31-Mar-16 | |||
| (unaudited) | (unaudited) | (audited) | |||
| Notes | £'000 | £'000 | £'000 | ||
| Assets | |||||
| Non current assets | |||||
| Intangible assets | 9 | 5,273 | 3,774 | 2,550 | |
| Property, plant and equipment | 191 | 278 | 247 | ||
| Deferred tax assets | 1,052 | 1,076 | 1,052 | ||
| 6,516 | 5,128 | 3,849 | |||
| Current assets | |||||
| Trade and other receivables | 49,058 | 18,951 | 35,413 | ||
| Financial assets | 10 | 1,757 | 668 | 139 | |
| Cash and cash equivalents | 18,333 | 16,176 | 18,967 | ||
| Total current assets | 69,148 | 35,795 | 54,519 | ||
| Liabilities | |||||
| Current liabilities | |||||
| Trade and other payables | (52,304) | (16,587) | (31,279) | ||
| Corporation tax payable | (907) | (1,007) | (911) | ||
| Total current liabilities | (53,211) | (17,594) | (32,190) | ||
| Net current assets | 15,937 | 18,201 | 22,329 | ||
| Net assets | 22,453 | 23,329 | 26,178 | ||
| Shareholders' equity | |||||
| Ordinary shares | 454 | 454 | 454 | ||
| Share premium | 17,692 | 17,692 | 17,692 | ||
| Capital redemption reserve | 19 | 19 | 19 | ||
| Retained earnings | 7,323 | 7,309 | 9,330 | ||
| Own shares held | (3,035) | (2,145) | (1,317) | ||
| Total equity | 22,453 | 23,329 | 26,178 |
Consolidated Cash Flow Statement
Six months ended 30 September 2016
| Six | Six | Year | |
| months to | months to | ended | |
| 30-Sep-16 | 30-Sep-15 | 31-Mar-16 | |
| (unaudited) | (unaudited) | (audited) | |
| £'000 | £'000 | £'000 | |
| Cash flows from operating activities | |||
| Cash inflow from operations | 29,365 | 20,570 | 48,614 |
| Cash outflow from operations | (21,177) | (15,438) | (38,337) |
| Cash inflow/(outflow) from changes in unit trust receivables and payables | 2,535 | (677) | (583) |
| Net cash from operations | 10,723 | 4,455 | 9,694 |
| Interest received | 9 | 8 | 16 |
| Tax paid | (500) | (583) | (1,833) |
| Net cash from operating activities | 10,232 | 3,880 | 7,877 |
| Cash flows from investing activities | |||
| Purchase of property and equipment | (8) | (57) | (93) |
| Acquisitions | (4,083) | - | - |
| Purchase of ICI's | - | (207) | (207) |
| Purchase of financial assets | (940) | - | - |
| Purchase of seeding investments | (110) | (74) | (98) |
| Sale of seeding investments | 85 | - | 191 |
| Net cash used in investing activities | (5,056) | (338) | (207) |
| Cash flows from financing activities | |||
| Purchase of own shares | (1,718) | (1,150) | (1,136) |
| Dividends paid | (4,092) | (2,609) | (3,960) |
| Net cash used in financing activities | (5,810) | (3,759) | (5,096) |
| Net (decrease)/increase in cash and cash equivalents | (634) | (217) | 2,574 |
| Opening cash and cash equivalents* | 18,967 | 16,393 | 16,393 |
| Closing cash and cash equivalents | 18,333 | 16,176 | 18,967 |
* Cash and cash equivalents consists only of cash balances.
Consolidated Statement of Change in Equity
Six months ended 30 September 2016
| Share | Share | Capital | Retained | Own shares | Total | ||
| capital | premium | redemption | earnings | held | Equity | ||
| £ '000 | £ '000 | £ '000 | £ '000 | £ '000 | £ '000 | ||
| Balance at 1 April 2016 brought forward | 454 | 17,692 | 19 | 9,330 | (1,317) | 26,178 | |
| Profit for the period | - | - | - | 1,749 | - | 1,749 | |
| Total comprehensive income for the period | - | - | - | 1,749 | - | 1,749 | |
| Dividends paid | - | - | - | (4,092) | - | (4,092) | |
| Purchase of own shares | - | - | - | - | (1,718) | (1,718) | |
| Equity share options issued | - | - | - | 336 | - | 336 | |
| Balance at 30 September 2016 | 454 | 17,692 | 19 | 7,323 | (3,035) | 22,453 |
Consolidated Statement of Change in Equity
Six months ended 30 September 2015
| Share | Share | Capital | Retained | Own shares | Total | ||
| capital | premium | redemption | earnings | held | Equity | ||
| £ '000 | £ '000 | £ '000 | £ '000 | £ '000 | £ '000 | ||
| Balance at 1 April 2015 brought forward | 454 | 17,692 | 19 | 11,395 | (5,812) | 23,748 | |
| Profit for the period | - | - | - | 3,319 | - | 3,319 | |
| Total comprehensive income for the period | - | - | - | 3,319 | - | 3,319 | |
| Dividends paid | - | - | - | (2,609) | - | (2,609) | |
| Purchase of own shares | - | - | - | - | (1,150) | (1,150) | |
| Purchase of ICI's | - | - | - | (5,024) | 4,817 | (207) | |
| Equity share options issued | - | - | - | 228 | - | 228 | |
| Balance at 30 September 2015 | 454 | 17,692 | 19 | 7,309 | (2,145) | 23,329 |
Consolidated Statement of Change in Equity
Year ended 31 March 2016
| Share | Share | Capital | Retained | Own shares | Total | ||
| capital | premium | redemption | earnings | held | Equity | ||
| £ '000 | £ '000 | £ '000 | £ '000 | £ '000 | £ '000 | ||
| Balance at 1 April 2015 brought forward | 454 | 17,692 | 19 | 11,395 | (5,812) | 23,748 | |
| Profit for the period | - | - | - | 7,310 | - | 7,310 | |
| Total comprehensive income for the period | - | - | - | 7,310 | - | 7,310 | |
| Dividends paid | - | - | - | (3,960) | - | (3,960) | |
| Purchase of own shares | - | - | - | - | (1,136) | (1,136) | |
| Purchase of ICI's | - | - | - | (5.838) | 5,631 | (207) | |
| Equity share options issued | - | - | - | 423 | - | 423 | |
| Balance at 31 March 2016 | 454 | 17,692 | 19 | 9,330 | (1,317) | 26,178 |
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 2016 and 2015 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 2016, which were prepared in accordance with International Financial Reporting Standards, comprising standards and interpretations approved by either the International Accounting Standards Board or the International Financial Reporting Interpretations Committee or their predecessors, as adopted by the European Union ("IFRS"), and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, have been delivered to the Registrar of Companies. The auditors' opinion on these accounts was unqualified and did not contain a statement made under s498 of the Companies Act 2006.
The financial statements have been prepared in accordance with the Disclosure 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.
2. Alternative Performance Measures
The Group assess its performance using a variety of measures that are not defined under IFRS and are therefore termed alternative performance measures ("APM's"). The APMs that we use may not be directly comparable with similarly named measures used by other companies.
The Group uses the APM's to present its financial performance, in a manner which is aligned with the requirements of our stakeholders. By presenting these APM's it enables comparison with our peers who may use different accounting policies.
The Group uses the following APM's:
| Alternative Performance Measure | Definition | Reconciliation | |
| Adjusted profit before tax | Profit before tax, before depreciation, amortisation, non-recurring items* and share incentivisation schemes | Note 6 |
Adjusted profit before tax is used to present a measure of profitability which excludes the effects of non-recurring and non-cash items and capital investment (depreciation and amortisation), enabling comparison with our peers and to provide a consistent measure of the businesses performance.
| Adjusted operating profit | Adjusted profit before tax, before interest. | Note 6 | |
| Adjusted basic earnings per share | Adjusted profit before tax divided by the weighted average number of shares in issue for the period | n/a | |
| Adjusted diluted earnings per share | Adjusted profit before tax divided by the diluted weighted average number of shares in issue for the period | n/a |
* Non-recurring items include cost reduction expenses, restructuring costs, acquisition related costs, integration costs, severance compensation and non-recurring legal expenses.
3. Segmental reporting
The Group's operates only in one business segment - Investment management.
The Group offers different fund products through different distribution channels. All financial, business and strategic decisions are made centrally by the Board, which determines the key performance indicators of the Group. The Group reviews financial information presented at a Group level. The Board, is therefore, the chief operating decision-maker for the Group. The information used to allocate resources and assess performance is reviewed for the Group as a whole. On this basis, the Group considers itself to be a single-segment investment management business.
4. Revenue
| Six | Six | Year | |
| months to | months to | ended | |
| 30-Sep-16 | 30-Sep-15 | 31-Mar-16 | |
| (unaudited) | (unaudited) | (audited) | |
| £'000 | £'000 | £'000 | |
| Revenue | |||
| - Revenue | 21,985 | 18,666 | 37,634 |
| - Performance fee revenue | 58 | 42 | 7,357 |
| Total Revenue | 22,043 | 18,708 | 44,991 |
5. Administration expenses
| Six | Six | Year | |
| months to | months to | ended | |
| 30-Sep-16 | 30-Sep-15 | 31-Mar-16 | |
| (unaudited) | (unaudited) | (audited) | |
| £'000 | £'000 | £'000 | |
| Employee related expenses | |||
| Director and employee costs | 2,291 | 1,886 | 4,459 |
| Pension costs | 151 | 101 | 217 |
| Share incentivisation expense | 670 | 240 | 560 |
| Severance compensation | 25 | 6 | 93 |
| 3,137 | 2,233 | 5,329 | |
| Non employee related expenses | |||
| Members' drawings charged as an expense | 8,175 | 6,429 | 17,665 |
| Restructuring (acquisition related and other) | 818 | 22 | 1,884 |
| Members' share incentivisation expense | 1,588 | 123 | 111 |
| Depreciation, Intangible asset amortisation and impairment | 1,424 | 1,281 | 2,571 |
| Other administration expenses | 4,744 | 4,367 | 7,991 |
| Total administration expenses | 19,886 | 14,455 | 35,551 |
6. Adjusted profit before tax
Adjusted profit before tax is reconciled in the table below:
| Six | Six | Year | |
| months to | months to | ended | |
| 30-Sep-16 | 30-Sep-15 | 31-Mar-16 | |
| (unaudited) | (unaudited) | (audited) | |
| £'000 | £'000 | £'000 | |
| Profit for the period | 1,749 | 3,319 | 7,310 |
| Taxation | 496 | 916 | 2,094 |
| Profit before tax | 2,245 | 4,235 | 9,404 |
| Employee related share incentivisation expense | 573 | 240 | 560 |
| Member related share incentivisation expense | 1,588 | 123 | 111 |
| Severance compensation | 190 | 6 | 93 |
| Professional services1 | 818 | 22 | 1,884 |
| Depreciation, Intangible asset amortisation and impairment | 1,424 | 1,281 | 2,571 |
| Adjustments | 4,593 | 1,672 | 5,219 |
| Adjusted profit before tax | 6,838 | 5,907 | 14,623 |
| Interest receivable | (9) | (8) | (16) |
| Adjusted operating profit | 6,829 | 5,899 | 14,607 |
| Adjusted basic earnings per share | 12.14 | 10.69 | 26.38 |
| Adjusted diluted earnings per share | 11.89 | 10.22 | 25.70 |
1 Includes legal costs relating to claim by a former member and costs relating to the acquisition of the Argonaut business.
7. Taxation
The half yearly tax charge has been calculated at the estimated full year effective UK corporation tax rate of 20% (2015: 20%).
8. Earnings per share
The calculation of basic earnings per share is based on profit after taxation and the weighted average number of Ordinary Shares in issue for each period. The weighted average number of Ordinary Shares for the six months ended 30 September 2016 was 45,043,211 (30 September 2015: 46,658,542, 31 March 2016: 44,346,674). 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 2016. The adjusted weighted average number of Ordinary Shares so calculated for the period was 46,010,147 (30 September 2015: 45,656,303, 31 March 2016: 45,518,720). This is reconciled to the actual weighted number of Ordinary Shares as follows:
| 30-Sep-16 | 30-Sep-15 | 31-Mar-16 | |
| Weighted average number of Ordinary Shares | 45,043,211 | 43,658,542 | 44,346,674 |
| Weighted average number of dilutive Ordinary shares under option: | |||
| - to Liontrust Option Plan | 35,297 | 44,126 | 37,062 |
| - to the Deferred Bonus and Variable Allocation Plan | 401,009 | 402,870 | 324,602 |
| - to the Liontrust Members Incentive Plan | 19,891 | 1,550,765 | 810,382 |
| - to the Liontrust Long Term Incentive Plan | 510,739 | - | - |
| Adjusted weighted average number of Ordinary Shares | 46,010,147 | 45,656,303 | 45,518,720 |
9. Intangible assets
Intangible assets represent investment management contracts that have been capitalised upon acquisition and are amortised on a straight-line basis over a period of 5 years. The intangible asset on the balance sheet represents investment management contracts as follows:
| 30-Sep-16 | 30-Sep-15 | 31-Mar-16 | |
| £'000 | £'000 | £'000 | |
| Investment management contracts acquired from Walker Crips Asset Managers Limited | 1,326 | 3,774 | 2,550 |
| Investment management contracts acquired from Argonaut | 3,947 | - | - |
| 5,273 | 3,774 | 2,550 |
As noted in the 2016 Annual report we agreed to acquire the European income business of Argonaut Capital Partners LLP (the 'acquisition'). The acquisition completed in July 2016.
Determining whether a transaction is acquisition of a business or a separately identifiable asset is a matter of significant judgement. It involves determining whether a particular set of assets and activities are capable of being conducted and managed as a business by a market participant. Directors have considered all relevant aspects of the acquisition in conjunction with the guidance under the relevant accounting standards and concluded that the Argonaut acquisition was not an acquisition of a business because the assets purchased by the Group were not capable of being managed as a business in their own capacity. As such assets acquired have been recognised as intangible assets.
10. 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 (these are valued at bid price) and shares in the sub-funds of Liontrust Global Funds Plc held as part of the Liontrust DBVAP.
Assets held as available-for-sale:
The Group's assets held as available-for-sale represent shares in Liontrust GF Macro Equity Income Fund, Liontrust GF Global Strategic Equity Fund, Liontrust GF European Strategic Equity Fund, Liontrust GF UK Growth Fund, Liontrust GF Global Water & Agricultural Fund and Liontrust GF Asia Income Fund (all sub-funds of Liontrust Global Funds Plc) and are valued at bid price).
11. Related party transactions
During the six months to 30 September 2016 the Group received fees from unit trusts under management of £16,792,000 (2015: £16,291,000). Transactions with these unit trusts comprised creations of £374,117,000 (2015: £215,667,000) and liquidations of £373,947,000 (2015: £115,711,000). 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 2016 the Group owed the unit trusts £43,130,000 (2015: £12,764,000) in respect of unit trust creations and was owed £43,131,000 (2015: £13,391,000) in respect of unit trust cancellations and fees.
During the six months to 30 September 2016 the Group received fees from offshore funds under management of £613,000 (2015: £547,000). Transactions with these funds comprised purchases of £110,000 (2015: £74,000) and sales of £85,000 (2015: £nil). As at 30 September 2016 the Group was owed £99,000 (2015: £185,000) in respect of management fees.
As at 30 September 2016 members owed Liontrust Fund Partners LLP and Liontrust Investment Partners LLP (the 'LLPs') £492,000 (2015: £706,000). These loans were provided in connection with the relevant members' duties as a member of the relevant LLP.
During the six months to 30 September 2016 remuneration paid to key decision makers (the Executive Directors) was £430,000 (2015: £449,000).
12. Contingent assets and liabilities
The Group can earn performance fees on some of the segregated and fund accounts that it manages. In some cases a proportion of the fee earned is deferred until the next performance fee is payable or offset against future underperformance on that account. As there is no certainty that such deferred fees will be collectable in future years, the Group's accounting policy is to include performance fees in income only when they become due and collectable and therefore the element (if any) deferred beyond 30 September 2016 has not been recognised in the results for the year.
In the normal course of business a contingent liability has arisen in relation to a claim made by a former member against Liontrust Asset Management Plc, Liontrust Investment Partners LLP ("LIP"), Liontrust Investment Services Limited and the individual members of LIP. As the timing and amount of any potential liability is unknown and cannot be reliably estimated at this stage they are not disclosed.
A contingent liability has arisen in relation to a tax covenant claim by Walker Crips Group Plc in relation to the acquisition of Walker Crips Asset Managers Limited in April 2012 and for which the underlying basis of the claim is unclear at this time. As the timing and amount of any potential liability is unknown and cannot be reliably estimated at this stage, it is not disclosed.
A contingent liability has arisen in relation to expense caps which are payable to the Offshore funds where expenses for each fund exceed the agreed total expense ratio as set out in the Prospectus. In accordance with the Prospectus, the amount payable to the offshore funds has not crystallised for certain funds at 30 September 2016, the potential liability is unknown and cannot be reliably estimated and has therefore not been disclosed.
13. Key risks
The Directors have identified the risks and uncertainties that affect the Group's business and believe that they will be substantially the same for the second half of the year as the current risks as identified in the 2016 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 2016 Annual Report and Note 2 ""Financial risk management"" on page 58 of the 2016 Annual Report.
14. 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 Ions Vinay Abrol
Chief Executive Chief Operating Officer and Chief Financial Officer
14 November 2016
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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