TIDMLIO
RNS Number : 5541D
Liontrust Asset Management PLC
27 June 2019
Embargoed until 0700 hours, Thursday 27 June 2019
LIONTRUST ASSET MANAGEMENT PLC
FULL YEAR RESULTS FOR THE YEARED 31 MARCH 2019
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 2019.
Results:
-- Adjusted profit before tax of GBP30.1 million (2018: GBP27.4 million), an increase of 10%
-- Adjusted diluted earnings per share of 46.9 pence per share
(2018: 42.7 pence per share), an increase of 10%
-- Profit before tax of GBP19.0 million (2018: GBP12.3 million),
an increase of 55%. This includes costs of GBP11.1 million (2018:
GBP15.1 million) relating to the amortisation of intangible assets
and other non-cash and non-recurring costs (see note 5 below)
-- Revenues of GBP85 million (2018: GBP77 million), an increase of 10%
Dividend:
-- Second Interim dividend per share of 20.0 pence (2018: 16.0
pence), which will be payable on 9 August 2019. This brings the
total dividend per share for the financial year ending 31 March
2019 to 27.0 pence (2018: 21.0 pence), an increase of 29%
Assets under management:
-- On 31 March 2019, assets under management ("AuM") were
GBP12.7 billion (2018: GBP10.5 billion), an increase of 21%
-- AuM as at close of business on 25 June 2019 were GBP14.046 billion
Flows:
-- Net inflows for the year to 31 March 2019 of GBP1,775 million (2018: GBP1,004 million)
Commenting on the results, John Ions, Chief Executive, said:
"Record net inflows of GBP1.8 billion and a 21% increase in AuM
emphasise another successful year for Liontrust.
This success has been achieved by our continued focus on
executing our business plan. Over the past nine years, we have
built an impressive group of investment teams, a great distribution
franchise and a strong and distinctive brand.
Liontrust had the 7(th) highest total net sales (including
non-UK domiciled funds) in the UK in 2018 and the 5(th) highest in
the first three months of 2019, according to the Pridham Report.
The record flows have been achieved across a broad range of
funds.
The Sustainable Investment team, who joined Liontrust on 1 April
2017, has reached GBP3.74 billion in AuM, the Global Fixed Income
team has raised GBP419 million in less than a year and the Economic
Advantage team continues to produce impressive results.
The talent we have is demonstrated by the fact that six funds
managed by the Economic Advantage and Sustainable Investment teams
have been shortlisted for Investment Week Fund Manager of the Year
Awards on 27 June, along with Liontrust being nominated for Global
Group of the Year.
We will further extend our investment capability with strategic
hires when the right opportunities arise and for which we believe
there is investor demand.
We have strong brand awareness, and there is a good
understanding by intermediaries of what differentiates Liontrust. A
trusted brand is vital in attaining and retaining investor support
and loyalty.
Moving all our funds - UK and Irish domiciled - to Bank of New
York Mellon (BNYM), with the company becoming our one
administrator, has been completed. This has secured a solid
foundation on which to support our future expansion.
We continue to strive for a better future for Liontrust and most
importantly for our clients. We will achieve this by delivering
performance and value in a highly competitive market."
For further information please contact:
Liontrust Asset Management 020 7412 1700
John Ions, Vinay Abrol www.liontrust.co.uk
Simon Hildrey - Chief Marketing Officer
Numis Securities Limited 020 7260 1000
Charles Farquhar
Macquarie Capital (Europe) Limited 020 3037 2000
Advisory - Jonny Allison, Kavita Choitram
Corporate Broking - Alex Reynolds, Nicholas Harland
N+1 Singer Advisory LLP 020 7496 3000
Corporate Broking- Tom Salvesen
Chairman's Statement
Introduction
"To be absolutely certain about something, one must know
everything or nothing about it."
This quote was famously uttered by Henry Kissinger, the former
US Secretary of State, and originally attributed to the French
philosopher Voltaire. There are different interpretations over what
Voltaire meant by it, but I feel it is an apt summing up of the
world we live in today.
Everyone now has the opportunity to express their opinion on any
subject to the rest of the world through social media, whether it
is based on knowledge or not. And often this opinion is voiced with
an incredible amount of certainty. It may be an age thing, but the
world currently seems an unhappy place.
The irony of this proliferation of strident views is the fact we
can be less certain about the future rather than more given the
breath-taking pace of change which is driven by technology and is
having a profound effect not just on the financial world, but also
on the social, political and economic.
For investors, this presents opportunities and challenges. Our
fund managers at Liontrust focus on their investment processes,
ignoring the market noise. And our Sustainable Investment team
identifies transformational trends that will improve people's lives
and then invests in companies likely to benefit from them.
It is because of the attractions of such investment approaches
that I believe investors will continue to put money into actively
managed funds. Well, at least those funds that offer well-defined
investment processes so they do "what it says on the tin" and
provide superior returns over the long term.
This is my 47(th) year in the fund management industry and I
have witnessed many crashes, bubbles, too many businesses going
bust and extreme irrationality. But it feels like we live in ever
more perilous times today. Global debt, for example, could rise to
$500 trillion in a few years' time, and governments seem unable or
unwilling to grapple with the rising costs of healthcare, pensions
or, for that matter, the rising explosion of personal debt.
To avoid the pitfalls and headwinds that there will always be
and to cope with increased longevity and the new world of pensions,
the need for good quality fund management has never been
greater.
I am pleased to report that your company continues to be in good
shape to meet this growing need. Our Chief Executive John Ions has
alluded to some of the developments and successes of the last year
in his report and I am very proud of the achievements of everyone
at Liontrust.
This is my last Chairman's Statement. After 10 years as
Executive and Non-executive Chairman of the company, I will be
stepping down and leaving the Board of Directors after the AGM in
September. I have enjoyed the past decade as your Chairman and look
back with immense pride at how we steered the ship away from the
rocks back in 2009 and 2010 when Liontrust was in a perilous state
and was losing assets under management at an alarming and
unsustainable rate.
Back in 2009, we undertook a radical review of the company and
then in 2010 appointed John as Chief Executive. We introduced a
highly disciplined approach to the most important area of activity
- the management of our investors' funds. It has been this
single-minded approach and some tactical acquisitions which have
led to a transformation of your company over the past nine years.
There are many measures of success of the business, and the share
price is a key one. From 31 March 2010 to 31 March 2019, the share
price rose from 101.25p to 607p, with a low of 70p in July 2010,
and has subsequently gone above 700p.
One headwind confronting asset managers is the rise in
regulatory costs, which are becoming an ever-higher proportion of
"fixed" costs and may have a profound impact on the future
landscape of our industry. We must all be vigilant against asset
managers becoming so large that they resemble utility companies
unable to deliver superb performance. If this is the eventual
outcome, it will be a sad day.
Liontrust is counteracting this by assembling an excellent group
of fund management teams and funds and striving to become more
efficient. It is partly for the latter reason that we have just
completed a major project to streamline our middle and back
office.
As previously announced, Alastair Barbour will take over as your
Chairman, and I will leave Liontrust in a very good place and safe
hands, being in robust financial shape and well positioned to face
the challenges ahead. With John as Chief Executive, along with the
rest of the senior management and fund management teams, I have
every confidence Liontrust will continue to prosper.
Results
Profit before tax is GBP19.029 million (2018: GBP12.313
million), an increase of 55%.
Adjusted profit before tax was GBP30.093 million (2018:
GBP27.378 million). Adjusted profit before tax is disclosed in
order to give shareholders an indication of the profitability of
the Group excluding non-cash (depreciation, intangible asset
amortisation and share incentivisation related) expenses and
non-recurring (professional fees relating to acquisition, cost
reduction, restructuring and severance compensation related)
expenses ("Adjustments"), see note 5 below for a reconciliation of
adjusted profit (or loss) before tax.
Dividend
The success in fund performance and distribution has resulted in
a 77% increase in net inflows, a 21% increase in assets under
management and a 17% increase in revenues excluding performance
fees when compared to last year. This has enabled the Board to
declare a second interim dividend of 20.0 pence per share (2018:
16.0 pence), which will be payable on 9 August 2019 to shareholders
who are on the register as at 5 July 2019, the shares going
ex-dividend on 4 July 2019. The total dividend for the financial
year ending 31 March 2019 is 27.0 pence per share (2018: 21.0 pence
per share), an increase of 29% compared with last year.
The Company has a Dividend Reinvestment Plan ("DRIP") that
allows shareholders to reinvest dividends to purchase additional
shares in the Company. For shareholders to apply the proceeds of
this and future dividends to the DRIP, application forms must be
received by the Company's Registrars by no later than 19 July 2019.
Existing participants in the DRIP will automatically have the
dividend reinvested. Details on the DRIP can be obtained from Link
Asset Services on 0371 664 0381 or at
www.linkassetservices.com/shareholders-and-investors/dividend-reinvestment-plan.
(Calls are charged at the standard geographic rate and will vary by
provider. Calls outside the United Kingdom will be charged at the
applicable international rate. Lines are open between 09:00 -
17:30, Monday to Friday excluding public holidays in England and
Wales).
Adrian Collins
Chairman
26 June 2019
Chief Executive's Statement
Introduction
The continued success of Liontrust shows the value that clients
and investors place on our approach to managing portfolios on their
behalf. Liontrust has now enjoyed nine successive years of positive
net inflows, with the latest of GBP1.8 billion being the Company's
record for a financial year. These sales helped to grow the
company's AuM to GBP12.65 billion on 31 March 2019, a 21% increase
from 12 months earlier.
In reviewing the achievements of the business, we place great
importance on whether we are managing Liontrust sustainably and
responsibly. This recognises the increasing importance attached to
environmental, social and governance (ESG) for investors and
society more widely. Liontrust is committed to ESG initiatives and
is supplying research services to all the investment teams so they
are aware of controversies and ESG issues for stocks within their
portfolios.
Liontrust's success over the past year has been achieved against
a backdrop of political turbulence and slow global economic growth.
This has led to retail investors being more cautious about
committing their savings, with equity funds enduring negative flows
in 10 of the past 12 months to the end of March 2019 (Source:
IA).
Despite this market environment, we were able to generate strong
sales throughout the year. The fact that each quarter of the latest
financial year was among the top 10 in Liontrust's history
for gross and net inflows reiterates the progress the Company
continues to make. We have been able to achieve this success by
focusing on what we do well and delivering added value to
clients
and investors over the long term.
At the heart of this is the quality of our fund management
teams, the robustness of their investment processes and the
long-term performance they have delivered. While performance is not
predictable, the way in which funds are managed should be. All of
Liontrust's fund management teams clearly explain and document
their investment processes, which are repeatable and scalable. This
gives our clients and investors reassurance that the funds will be
managed in the way they expect them to be.
There is a huge savings shortfall globally and good active
management has a vital role to play in helping to reduce this. Part
of the responsibility is for active managers to explain how we
can
benefit investors' portfolios, including the ability to exploit
market inefficiencies and to manage volatility over the long term
in a way that passive funds cannot.
Liontrust expanded its investment offering in 2018 through the
launch of three bond strategies - strategic, high yield and
absolute return. These strategies had attracted more than GBP400
million by the end of the financial year and we expect this growth
to continue given the team's experience, track record and focus on
managing volatility. Clients appreciate the team's approach in
finding value among large, liquid and listed holdings given that
bond markets are expected to become more challenging over the next
few years.
The sales team has further diversified our client base in the UK
and continental Europe. This includes agreements with two major
distribution partners in Europe for our Sustainable Investment
team. In the UK, we have enjoyed inflows into and agreements with
new intermediary clients for our Global Fixed Income, Sustainable
and Multi-Asset teams in particular.
Liontrust has enhanced the infrastructure of the business and
sought to improve our operational efficiencies over the past year.
This includes completing the move of all our funds - UK and Irish
domiciled - to one administrator: Bank of New York Mellon (BNYM).
This agreement has replaced the five asset servicing relationships
we had had across the Liontrust business.
We appreciate all the support we receive from our clients and
investors. We are only too aware of the myriad other options
clients can invest in or use their savings for, and we take
seriously our role as custodians of their assets.
Adrian Collins
Chairman Adrian Collins will be stepping down this September
after 10 years on the Board. Adrian brought me to Liontrust in 2010
when the outlook for the Company was much different to today. Over
the years, with the help of exceptional people who work at
Liontrust, we have guided the business to the award-winning, strong
position it is currently in.
The journey has been challenging but most of all a fantastic
experience, and I am delighted he placed his confidence in me nine
years ago. I am also deeply grateful for his support and guidance
over this period. Adrian leaves Liontrust in a far better place and
well positioned to prosper in the future.
Alastair Barbour will take over the mantle of Chairman after the
AGM in September. I have worked with Alastair for a number of years
as non-executive Chairman of the Audit and Risk Committee, and I am
confident that he will continue to steer Liontrust on its
successful pathway.
His existing knowledge of the Company holds in him in good stead
to pick up the reigns seamlessly and I look forward to working with
Alastair in his new role as Chairman.
Assets under Management
On 31 March 2019, our AuM stood at GBP12.655 billion and were
broken down by type and process as follows:-
International
Process Total Institutional UK Retail Multi-Asset Funds
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
Cashflow Solution 975 589 294 - 92
Economic Advantage 6,235 226 5,893 - 116
Macro Thematic 144 - 144 - -
European Income 176 - 176 - -
Asia 118 - 107 - 11
Sustainable Investment 3,744 31 3,516 - 197
Global Fixed
Income 419 - 186 - 233
Multi-Asset 844 - - 844 -
Total 12,655 846 10,316 844 649
Funds Flows
Liontrust has recorded net inflows over the financial year to 31
March 2019 of GBP1,775 million (2018: GBP1,004 million). A
reconciliation of fund flows and AuM over the financial year to 31
March 2019 is as follows:-
International
Total Institutional UK Retail Multi-Asset Funds
GBPm GBPm GBPm GBPm GBPm
Opening AuM - 1 April
2018 10,475 1,144 8,201 700 430
Net flows 1,775 (264) 1,701 129 209
Market and Investment
performance 405 (34) 414 15 10
Closing AuM - 31 March
2019 12,655 846 10,316 844 649
Outlook
There is a worldwide need for people to save for their future
and to be helped in achieving their financial objectives. Liontrust
is well placed to meet and benefit from this growing demand.
We are building a high-quality investment proposition across
multiple teams and asset classes, are broadening our distribution
capability in the UK and internationally, have a strong brand in
the UK and are extending the profile of Liontrust to the wholesale
market in continental Europe. We are continually developing the
business infrastructure to service and support the growth in
clients and assets.
I look forward to the next few years with great confidence for
Liontrust.
John Ions
Chief Executive
26 June 2019
Extracts from the Strategic Report
UK Retail Fund Performance (Quartile ranking)
Quartile Quartile Quartile Quartile Launch
ranking - ranking ranking ranking Date/Manager
Since Launch/Manager - 5 year - 3 year - 1 year Appointed
Appointed
------------------------ ---------------------- ---------- ---------- ---------- --------------
Liontrust UK Growth
Fund 1 1 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 1 - 1 1 09/03/2016
------------------------ ---------------------- ---------- ---------- ---------- --------------
Liontrust Macro Equity
Income Fund 1 4 3 2 31/10/2003
------------------------ ---------------------- ---------- ---------- ---------- --------------
Liontrust Macro UK
Growth Fund 2 4 4 3 01/08/2002
------------------------ ---------------------- ---------- ---------- ---------- --------------
Liontrust European
Growth Fund 1 1 2 2 15/11/2006
------------------------ ---------------------- ---------- ---------- ---------- --------------
Liontrust Asia Income
Fund 2 2 3 2 05/03/2012
------------------------ ---------------------- ---------- ---------- ---------- --------------
Liontrust European
Income Fund 4 4 4 3 15/12/2005
------------------------ ---------------------- ---------- ---------- ---------- --------------
Liontrust European
Enhanced Income Fund
(Hedged) 4 4 4 3 30/04/2010
------------------------ ---------------------- ---------- ---------- ---------- --------------
Liontrust Global
Income Fund 4 4 3 4 03/07/2013
------------------------ ---------------------- ---------- ---------- ---------- --------------
Liontrust Monthly
Income Bond Fund 2 2 1 4 12/07/2010
------------------------ ---------------------- ---------- ---------- ---------- --------------
Liontrust SF Absolute
Growth Fund 3 1 1 1 19/02/2001
------------------------ ---------------------- ---------- ---------- ---------- --------------
Liontrust SF Corporate
Bond Fund 1 2 1 3 20/08/2012
------------------------ ---------------------- ---------- ---------- ---------- --------------
Liontrust SF Cautious
Managed Fund 1 - 1 1 23/07/2014
------------------------ ---------------------- ---------- ---------- ---------- --------------
Liontrust SF Defensive
Managed Fund 1 - 1 1 23/07/2014
------------------------ ---------------------- ---------- ---------- ---------- --------------
Liontrust SF European
Growth Fund 2 2 3 3 19/02/2001
------------------------ ---------------------- ---------- ---------- ---------- --------------
Liontrust SF Global
Growth Fund 3 1 1 1 19/02/2001
------------------------ ---------------------- ---------- ---------- ---------- --------------
Liontrust SF Managed
Fund 2 1 1 1 19/02/2001
------------------------ ---------------------- ---------- ---------- ---------- --------------
Liontrust UK Ethical
Fund 2 1 1 1 01/12/2000
------------------------ ---------------------- ---------- ---------- ---------- --------------
Liontrust SF UK Growth
Fund 2 1 1 1 19/02/2001
------------------------ ---------------------- ---------- ---------- ---------- --------------
Source: Financial Express, total return (income reinvested and
net of fees), to 31 March 2019 unless otherwise stated, based on
primary share classes. The above funds are all UK authorised unit
trusts or UK authorised ICVCs (primary share class). Past
performance is not a guide to the future; the value of investments
and the income from them can fall as well as rise. Investors may
not get back the amount originally subscribed. Quartile rankings
correct as at 3 April 2019.
Consolidated Statement of Comprehensive Income
Year Year
ended ended
31-Mar-19 31-Mar-18
Note GBP'000 GBP'000
Revenue 3 97,556 85,785
Cost of sales 3 (12,924) (8,974)
----------- ----------
Gross profit 84,632 76,811
Realised profit on sale of financial
assets 25 3
Unrealised (loss)/profit on financial
assets - (142)
Contingent consideration (88) (912)
Administration expenses 4 (65,550) (63,450)
----------- ----------
Operating profit 5 19,019 12,310
Interest receivable 10 3
----------- ----------
Profit before
tax 19,029 12,313
Taxation (2,108) (3,590)
----------- ----------
Profit for
the year 16,921 8,723
Other comprehensive income:
Other Comprehensive income - 33
Total comprehensive income 16,921 8,756
=========== ==========
Pence Pence
Earnings per
share
Basic earnings per share 33.72 17.76
Diluted earnings per share 32.55 16.78
The notes 1 to 12 form an integral part of this condensed
consolidated financial information.
Consolidated Balance Sheet
As at 31 March 2019
As at As at
31-Mar-19 31-Mar-18
Note GBP'000 GBP'000
Assets
Non current assets
Intangible assets 11,505 13,521
Goodwill 11,872 11,872
Property, plant and
equipment 617 207
Total non current assets 23,994 25,600
----------------------- ----------
Current assets
Trade and other receivables 95,371 79,080
Financial assets 3,151 2,076
Cash and cash equivalents 35,551 30,775
Total current assets 134,073 111,931
----------------------- ----------
Liabilities
Non current liabilities
Deferred tax liability (1,620) (918)
DBVAP liability (1,166) (838)
Acquisition related contingent
liability - (2,912)
Total non current liabilities (2,786) (4,668)
----------------------- ----------
Current liabilities
Trade and other payables (99,710) (83,104)
Corporation tax payable - (1,403)
Total current liabilities (99,710) (84,507)
----------------------- ----------
Net current assets 34,363 27,424
----------------------- ----------
Net assets 55,571 48,356
======================= ==========
Shareholders' equity
Ordinary shares 507 495
Share premium 20,879 15,796
Deferred consideration - 3,959
Capital redemption reserve 19 19
Retained earnings 37,457 31,853
Own shares held (3,291) (3,766)
Total equity 55,571 48,356
======================= ==========
The notes 1 to 12 form an integral part of this condensed
consolidated financial information.
Consolidated Cash Flow Statement
For the year ended 31 March 2019
Year Year
ended ended
31-Mar-19 31-Mar-18
GBP'000 GBP'000
Cash flows from operating activities
Cash received from
operations 83,936 88,032
Cash paid in respect of operations (62,088) (60,783)
Net cash generated from changes in unit
trust receivables and payables 340 92
------------------------ -------------------------
Net cash generated from operations 22,188 27,341
Interest received 10 3
Tax paid (5,908) (2,774)
------------------------ -------------------------
Net cash generated from operating
activities 16,290 24,570
------------------------ -------------------------
Cash flows from investing activities
Purchase of property and equipment (609) (159)
Acquisition of ATI (net of
cash acquired) - (929)
Purchase of DBVAP Financial
Asset (1,629) (920)
Sale DBVAP Financial
Asset 753 -
Purchase of Seeding
investments (520) -
Sale of Seeding investments 422 54
Net cash used in investing
activities (1,583) (1,954)
------------------------ -------------------------
Cash flows from financing activities
Purchase of own shares (126) (930)
Sale of own
shares 601 -
Issue of new
shares 1,136 -
Dividends paid (11,542) (7,867)
------------------------ -------------------------
Net cash used in financing
activities (9,931) (8,797)
Net increase in cash and cash
equivalents* 4,776 13,819
Opening cash and cash equivalents* 30,775 16,956
Closing cash and cash
equivalents* 35,551 30,775
======================== =========================
* Cash and cash equivalents consists only of cash balances.
The notes 1 to 12 form an integral part of this condensed
consolidated financial information.
Consolidated Statement of Change in Equity
For the year ended 31 March 2019
Ordinary Share Deferred Capital Retained Own shares Total
shares premium consideration redemption earnings held Equity
GBP GBP
GBP '000 GBP '000 GBP '000 GBP '000 '000 GBP '000 '000
Balance at 01
April 2018
brought
forward 495 15,796 3,959 19 31,853 (3,766) 48,356
Profit for the
year - - - - 16,921 - 16,921
Other
comprehensive
income - - - - - - -
Total
comprehensive
income for the
year - - - - 16,921 - 16,921
Dividends paid - - - - (11,542) - (11,542)
Shares issued 2 1,134 - - - - 1,136
(Purchase)/sale
of own shares - - - - - 475 475
Deferred
consideration
ATI acquisition 10 3,949 (3,959) - - - -
EBT share option
settlement - - - - (1,972) - (1,972)
Equity share
options issued - - - - 2,197 - 2,197
Balance at 31
March 2019 507 20,879 - 19 37,457 (3,291) 55,571
==================== ======================= ======================== ========================= ========================== ======================== ======================
Consolidated Statement of Change in Equity
For the year ended 31 March 2018
Ordinary Share Deferred Capital Retained Own shares Total
shares premium consideration redemption earnings held Equity
GBP GBP GBP
'000 '000 GBP '000 GBP '000 GBP '000 GBP '000 '000
Balance at 1
April 2017
brought
forward 454 - - 19 28,936 (2,859) 26,550
Profit for the
year - - - - 8,723 - 8,723
Other
comprehensive
income - - - - 33 - 33
Total
comprehensive
income for
the
year - - - - 8,756 - 8,756
Dividends paid - - - - (7,867) - (7,867)
Shares issued 41 15,796 - - - - 15,837
Purchase of
own shares - - - - - (965) (965)
Deferred
consideration
ATI
acquisition - - 3,959 - - - 3,959
EBT share
option
settlement - - - - (58) 58 -
Equity share
options
issued - - - - 2,086 - 2,086
Balance at 31
March 2018 495 15,796 3,959 19 31,853 (3,766) 48,356
==================== ======================= ======================== ========================= ========================== ======================== ======================
The notes 1 to 12 form an integral part of this condensed
consolidated financial information.
Notes to the Financial Statements
1. Accounting policies
The Group's accounting policies are consistent with those set
out in the Annual Report and Accounts for the year ended 31 March
2018.
2. Segmental reporting
The Group operates only in one business segment - Investment
management.
Management offers different fund products through different
distribution channels. All key 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 (Gross profit)
The Group's main source of revenue is management fees.
Management fees are for investment management or administrative
services and are based on an agreed percentage of the AuM. Initial
charges and commissions are for additional administrative services
at the beginning of a client relationship, as well as ongoing
administrative costs. Performance fees are earned from some funds
when agreed performance conditions are met.
The Group has adopted IFRS 15 'Revenue from Contracts with
Customers' for the financial year ended 31 March 2019. The adoption
of this standard has not resulted in any changes to the way the
Group accounts for revenue or costs of sales. (The 2018 information
has been presented in the same format for comparative purposes)
Year Year
ended ended
31-Mar-19 31-Mar-18
GBP'000 GBP'000
Revenue
- Revenue 97,524 81,335
- Performance fee revenue 32 4,450
---------- ----------
Total Revenue 97,556 85,785
========== ==========
Cost of sales (12,924) (8,974)
---------- ----------
Gross profit 84,632 76,811
========== ==========
* Following the implementation of IFRS 15 on 1 April 2018
Management Fees are now shown gross, with rebates and commissions
disclosed in Cost of sales.
Revenue from earnings includes:
1) Investment management on unit trusts, open-ended investment
companies sub-funds, portfolios and segregated accounts;
2) Performance fees on unit trusts, open-ended investment
companies sub-funds, portfolios and segregated accounts;
3) Fixed administration fees on unit trusts and open-ended investment companies sub-funds;
4) Net value of sales and repurchases of units in unit trusts
and shares in open-ended investment companies (net of
discounts);
5) Net value of liquidations and creations of units in unit
trusts and shares in open-ended investment companies sub-funds;
6) Box profits on unit trusts; and
7) Foreign currency gains and losses.
Cost of sales includes:
1) Operating expenses including (but not limited to) keeping a
record of investor holdings, paying income, sending annual and
interim reports, valuing fund assets and calculating prices,
maintaining fund accounting records, depositary and trustee
oversight and auditors;
2) Rebates paid on investment management fees;
3) Sales commission paid or payable; and
4) External investment advisory fees paid or payable.
4. Administration expenses
Year ended Year ended
31-Mar-19 31-Mar-18
GBP'000 GBP'000
Employee related expenses
Director and employee costs 10,639 9,721
Pensions 562 585
Share incentivisation expense 3,970 2,929
DBVAP expense(1) 3,091 805
Severance compensation 70 430
------------------------------------------------ --------------------------------------- -----------
18,332 14,470
Non employee related expenses
Members drawings charged as an expense 27,995 25,357
Share incentivisation expense members 811 1,296
Member severance compensation - 339
Professional services (restructuring,
acquisition related and other)(2) 819 5,840
Depreciation and Intangible asset amortisation 2,215 2,481
Other administration expenses 15,378 13,667
------------------------------------------------ --------------------------------------- -----------
47,218 48,980
================================================ ======================================= ===========
65,550 63,450
================================================ ======================================= ===========
(1) Includes GBP1.5 million relating to 2015 DBVAP. The
Remuneration Committee chose to settle this award with cash rather
than using Liontrust shares held by the Liontrust Asset Management
Employee Benefit Trust ("EBT"), so that the EBT holds onto
Liontrust shares to reduce future dilution on awards under the
Liontrust Long Term Incentive Plan.
(2) Includes costs relating to the acquisition of ATI and costs
of a claim relating to the acquisition of Walker Crips Asset
Managers.
5. 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-19 31-Mar-18
GBP'000 GBP'000
Profit for the year 16,921 8,723
Taxation 2,108 3,590
----------------------------------------------- ----------- -----------
Profit before tax 19,029 12,313
Share incentivisation expense 4,781 4,225
Other comprehensive income - 33
DBVAP expense 3,091 805
Severance compensation 70 769
Acquisition related contingent 88 912
Professional services (1) 819 5,840
Depreciation, Intangible asset amortisation
and impairment 2,215 2,481
-----------------------------------------------
Adjustments 11,064 15,065
Adjusted profit before tax 30,093 27,378
Interest receivable (10) (3)
Adjusted operating profit 30,083 27,375
=============================================== =========== ===========
Adjusted basic earnings per share 48.57 45.14
----------------------------------------------- ----------- -----------
Adjusted basic earnings per share (excluding
performance fees) 48.55 42.53
----------------------------------------------- ----------- -----------
Adjusted diluted earnings per share 46.89 42.67
----------------------------------------------- ----------- -----------
Adjusted diluted earnings per share
(excluding performance fees) 46.87 40.19
----------------------------------------------- ----------- -----------
(1) Includes costs in connection with transfer of outsourced
providers, costs relating to the acquisition of ATI and costs
relating to a claim relating to the acquisition of Walker Crips
Asset Managers Limited.
(2) Assumes a tax rate of 19% (2018: 19%)
(3) Performance fee revenues contribution calculated in line
with operating margin of 35.5% (2018: 35.7%)
6. 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 year. The weighted average number
of Ordinary Shares was 50,185,745 for the year (2018: 49,125,724).
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 2019. The adjusted weighted average number of
Ordinary Shares so calculated for the year was 51,986,043 (2018:
51,977,398). This is reconciled to the actual weighted number of
Ordinary Shares as follows:
As at As at
31-Mar-19 31-Mar-18
number number
Weighted average number of Ordinary Shares 50,185,745 49,125,724
Weighted average number of dilutive Ordinary
shares under option:
- to the Liontrust Long Term Incentive Plan 1,711,753 1,463,856
- to the Liontrust Company Share Option Plan - -
- to the DBVAP 88,545 372,620
- to the ATI acquisition deferred payment - 1,015,198
Adjusted weighted average number of Ordinary
Shares 51,986,043 51,977,398
==================== ===========
7. Financial assets
The Group holds financial assets that have been categorised
within one of three levels using a fair value hierarchy that
reflects the significance of the inputs into measuring the fair
value. These levels are based on the degree to which the fair value
is observable and are defined as follows:
a) Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets and
liabilities;
b) Level 2 fair value measurements are those derived from inputs
other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
c) Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data.
As at the balance sheet date all financial assets are
categorised as Level 1.
Assets held at fair value through profit and loss:
The Group's financial assets represent shares in the Liontrust
GF Strategic Bond Fund, the Liontrust GF European Smaller Companies
Fund, the Liontrust GF European Strategic Equity Fund, the
Liontrust GF Asia Income Fund, and the Liontrust GF UK Growth Fund
(all sub-funds of Liontrust Global Funds PLC) and are valued at bid
price); and units in the Liontrust Global Income Fund, the
Liontrust Macro Equity Income Fund, the Liontrust Asia Income Fund
and the Liontrust UK Growth Fund.
8. 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 31
March 2019 has not been recognised in the results for the year.
There were no contingent assets or liabilities at 31 March 2019
(2018: GBPnil)
9. Key risks
The Directors have identified the risks and uncertainties that
affect the Group's business and believe that they are substantially
the same for this year as the current risks as identified in the
2018 Annual Report and Accounts. 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.
10. Directors responsibility statement
To the best of their knowledge and belief, the Directors confirm
that:
The consolidated financial statements of Liontrust Asset
Management PLC, prepared on a going concern basis in accordance
with IFRS as adopted by the EU, give a true and fair view of the
assets, liabilities, financial position and profit of Liontrust
Asset Management PLC and the undertakings included in the
consolidation taken as a whole;
The announcement includes a fair summary of the development and
performance of the business and the position of Liontrust Asset
Management PLC and the undertakings included in the consolidation
taken as a whole and a description of the principal risks and
uncertainties that they face.
11. Events after the reporting period
On the 13 May 2019 the Group paid GBP3 million to Alliance Trust
Plc in settlement of the contingent consideration for the
acquisition of Alliance Trust Investments Limited which was
completed on 1 April 2017.
Forward Looking Statements
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.
The Annual Report and Accounts is expected to be posted to
shareholders on or around 5 July 2019.
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.
END
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR SEDFIMFUSELM
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June 27, 2019 02:00 ET (06:00 GMT)
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