Interim Results
Embargoed until 0700 hours, 18 October 2006
LIONTRUST ASSET MANAGEMENT PLC
Interim results for the six months to 30 September 2006
Liontrust Asset Management PLC ("Liontrust" or "the Group"), the independent
specialist equities fund management group, today announces its interim results
for the six months ended 30 September 2006.
* On 30 September 2006 our funds under management stood at £5.193 billion,
16% higher than the level of £4.459 billion at the same time last year. By
17 October 2006 they had risen to £5.385 billion.
* European investment process defined. A Continental European authorised
unit trust and a Pan-European long/short hedge fund to be launched in
November.
* Gross unit trust sales averaged £32 million per month: net sales broke
even. Additional institutional funds of £75 million (net) won during the
six months to 30 September 2006.
* Profits before tax decreased marginally to £5.164 million after absorbing
the increased costs associated with establishing and developing our
European product and allowing for the continuing impact of IFRS.
* Performance fees of £134,000 were earned during the period (2005: nil).
* 5% increase in Interim dividend to 2.2 pence.
Commenting on these results, Nigel Legge, Chief Executive said:
"These results show that the business is in good shape. We hope to make our
new European product a success through good performance and broader
distribution across Europe. We believe our focus over the last eleven years on
investment process, clear communication and the continuity of our fund
management team will all play a part in gaining the confidence of new clients
while we continue to look after existing clients."
Chairman's Statement
The average level of funds under management over the six month period to 30
September 2006 was 17% higher at £5.118 billion, than the level of £4.360
billion for the corresponding six months last year. On 30 September 2006 our
funds under management stood at £5.193 billion and £5.385 billion on 17 October
2006. Profit before tax was £5.164 million, compared with £5.265 million for
the same period a year ago. Performance fees generated during the period were
£134,000 contributing £60,000 to operating profits after deduction of
compensation expenses. Last year we earned no performance fees in the
corresponding period. Total basic earnings per share are 11.13 pence, compared
with 11.20 pence last year.
We have kept a tight control on general operating costs. This year the cost :
income ratio was 65% compared with 64% for the same period last year. The
increase is due to a combination of increased costs associated with
establishing and developing our European product and the continuing impact of
IFRS. Headcount during the period averaged 39, hence the annualised gross
profit and operating profit per head is £689,000 and £240,000 respectively.
Your Board has declared a 5% increase in the interim dividend to 2.2 pence per
share from 2.1 pence a year ago. The dividend will be paid on 30 November to
shareholders on the register on 10 November with an ex-dividend date of 8
November.
At the end of September 2006 Liontrust First Income Fund, the unit trust based
on our Value Dynamic investment process, had grown to £1,307 million from £
1,187 million this time last year. Although net sales of authorised unit trusts
during the period were flat, gross unit trust sales averaged a healthy £32
million per month. Net institutional funds of £75 million were won during the
six months to 30 September 2006.
Having spent last year exploring opportunities for profitable growth we
established our European fund management business in July. The new team
arrived in March. The overwhelming support from shareholders led to 99.99% of
votes being cast in favour of the resolution relating to the setting up of our
European business.
The investment process for the management of European equity portfolios has now
been defined. The first funds will be launched in November, one a Continental
European authorised unit trust, the other a Pan-European long/short hedge
fund. In the first quarter of 2007 we will add more funds to the range. The
process and funds will be marketed to existing clients in the UK and to new
clients in Continental Europe.
This is an exciting development. We have the structure and staff to widen our
product range. We are confident that we can execute our strategy for growth
and build a successful European fund management business along side to the one
we have developed in the UK.
Bernard Asher
Chairman
17 October 2006
For further information please contact:
Liontrust Asset Management PLC
Nigel Legge 020 7412 1700
Vinay Abrol
JP Morgan
Cazenove
Richard Locke 020 7155 4706
Consolidated Income Statement
Six months to 30 September 2006
Six Six Twelve
months months months
to 30.9.06 to 30.9.05 to 31.3.06
Note (unaudited) (unaudited)* (audited)
£'000 £'000 £'000
Continuing operations
Revenue 13,503 13,228 26,887
Cost of sales (77) (101) (414)
Gross profit 13,426 13,127 26,473
Administrative expenses 2 (8,741) (8,376) (16,941)
Operating profit 4,685 4,751 9,532
Interest receivable 479 514 991
Profit before tax 5,164 5,265 10,523
Taxation 3 (1,681) (1,644) (3,275)
Profit for the period 3,483 3,621 7,248
Memo - Dividends (2,880) (2,892) (3,511)
pence pence pence
Basic earnings per share 4 11.13 11.20 22.69
Diluted earnings per share 4 10.78 11.20 22.52
The Revenue and Cost of sales figures for six months to 30 September 2005 have
been restated to show net values rather than amounts gross of creations and
cancellations and sales and repurchases.
Consolidated Balance Sheet
At 30 September 2006
30.9.06 30.09.05 31.3.06
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Non current assets
Property, plant and equipment 147 177 161
Deferred tax assets 251 157 239
398 334 400
Current assets
Receivables 10,205 15,663 13,799
Assets held at fair value through profit and loss 497 474 579
Cash and cash equivalents 17,806 25,272 22,238
28,508 41,409 36,616
Liabilities
Current liabilities
Payables (13,082) (27,722) (21,706)
Accruals (452) (628) (359)
(13,534) (28,350) (22,065)
Net current assets 14,974 13,059 14,551
Net assets 15,372 13,393 14,951
Equity
Ordinary shares 351 352 352
Share premium 8,900 8,878 8,900
Retained earnings 18,701 14,709 18,279
Own shares held (12,580) (10,546) (12,580)
Total equity 15,372 13,393 14,951
Consolidated Cash Flow Statement
Six months to 30 September 2006
Six Six Twelve
months months months
to 30.9.06 to 30.9.05 to 31.3.06
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Cash flows from operating activities
Cash inflow from operations 13,005 12,708 26,582
Cash outflow from operations (9,719) (9,461) (16,883)
Cash (outflow)/inflow from changes in unit trust receivables and payables (3,161) 3,227 (2,523)
Net cash generated from operations 125 6,474 7,176
Interest received 479 514 991
Tax paid (1,577) (1,687) (3,248)
Net cash from operating activities (973) 5,301 4,919
Cash flows from investing activities
(Purchase)/sale of property and equipment (19) 22 1
Net cash from investing activities (19) 22 1
Cash flows from financing activities
Net proceeds from issue of new shares - - 22
Purchase of own shares (560) (3,299) (5,333)
Dividends paid to shareholders (2,880) (2,892) (3,511)
Net cash used in financing activities (3,440) (6,191) (8,822)
Net decrease in cash and cash equivalents (4,432) (868) (3,902)
Opening cash and cash equivalents 22,238 26,140 26,140
Closing cash and cash equivalents 17,806 25,272 22,238
Consolidated Statement of Changes in Equity
Six months to 30 September 2006
Share Share Retained Own shares Total
capital premium earnings held equity
£ '000 £ '000 £ '000 £ '000 £ '000
Balance at 1 April 2006 brought forward 352 8,900 18,279 (12,580) 14,951
Purchase of shares by EBT - - - - -
Profit for the period - - 3,483 - 3,483
Total recognised income for the period - - 3,483 - 3,483
Dividends - - (2,880) - (2,880)
Buy back of own shares (1) - (560) - (561)
Equity share options charge - - 379 - 379
Balance at 30 September 2006 351 8,900 18,701 (12,580) 15,372
Six months to 30 September 2005
Share Share Retained Own shares Total
capital premium earnings held equity
£ '000 £ '000 £ '000 £ '000 £ '000
Balance at 1 April 2005 brought forward 352 8,878 13,729 (7,247) 15,712
Purchase of shares by EBT - - - (3,299) (3,299)
Profit for the period - - 3,621 - 3,621
Total recognised income for the period - - 3,621 - 3,621
Dividends - - (2,892) - (2,892)
Issue of share capital - - - - -
Equity share options charge - - 251 - 251
Balance at 30 September 2005 352 8,878 14,709 (10,546) 13,393
Year to 31 March 2006
Share Share Retained Own shares Total
capital premium earnings held equity
£ '000 £ '000 £ '000 £ '000 £ '000
Balance at 1 April 2005 brought forward 352 8,878 13,729 (7,247) 15,712
Purchase of shares by EBT - - - (5,333) (5,333)
Profit for the period - - 7,248 - 7,248
Total recognised income for the year - - 7,248 - 7,248
Dividends - - (3,511) - (3,511)
Issue of share capital* - 22 - - 22
Equity share options charge - - 813 - 813
Balance at 31 March 2006 352 8,900 18,279 (12,580) 14,951
*During the year 7,773 Ordinary share of 1 pence were issued, as the table
above is disclosed in £'000, no amount is disclosed in additions to share
capital.
Notes to the Financial Statements
Principle accounting policies
Basis of preparation
This interim report is unaudited and does not constitute statutory accounts
within the meaning of s240 of the Companies Act 1985. The statutory accounts
for 2006, which were prepared in accordance with International Financial
Reporting Standards, as endorsed by the European Union ('IFRS'), and with those
parts of the Companies Act 1985 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 s237
(2) or s237(3) of the Companies Act 1985.
The interim report has been prepared in accordance with IAS 34 'Interim
Financial Reporting' and the Listing Rules of the Financial Services Authority
('FSA').
The accounting policies applied in these interim accounts are consistent with
those applied in the Group's most recent annual accounts.
Administration expenses
Six Six Twelve
months months months
to 30.9.06 to 30.9.05 to 31.3.06
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Staff costs
- Director and employee costs 6,314 6,510 12,837
- Share option expense 379 251 813
- Share option NI liability 43 50 95
- Holiday pay costs 1 (30) 13
Other administration expenses 2,004 1,595 3,183
8,741 8,376 16,941
Taxation
The interim tax charge has been calculated at the estimated full year effective
corporation tax rate of 30% (2005: 30%). The share option expense has not been
taken into account in determining profit before tax as this is not an allowable
expense for taxation.
Earnings per share
The calculation of basic earnings per share is based on profit after taxation
and the weighted number of ordinary shares in issue for each period, excluding
the weighted number of shares held by the Liontrust Asset Management Employee
Trust. The weighted average number of ordinary shares was 31,291,737 for the
six months ended 30 September 2006, 32,317,322 for the six months ended 30
September 2005 and 31,942,107 for the year ended 31 March 2006.
The calculation of diluted earnings per share is based on profit after taxation
and the weighted average number of ordinary shares in issue for each period, as
above, adjusted for the effect of options to subscribe for shares that were in
existence at 30 September 2006. The adjusted weighted average number of
ordinary shares so calculated was 32,300,643 for the six months ended 30
September 2006, 32,319,157 for the six months ended 30 September 2005 and
32,191,237 for the year ended 31 March 2006.
Dividends
The Directors propose to pay an interim dividend in respect of the current
period of 2.2 pence per share (2005: 2.1 pence) payable on 30 November 2006 to
shareholders on the register at the close of business on 10 November 2006 with
an ex-dividend date of 8 November 2006.
Changes in Group's Operating Structure
Liontrust European Investment Services Limited
On 1 February 2006, the Company announced that Gary West and James Inglis-Jones
would be joining to develop a European equity investment process. On 16 June
2006, the Company entered into a conditional agreement (the "Agreement")
relating to a proposed investment in a new group company, Liontrust European
Investment Services Limited, which is to provide European equity fund
management services in relation to the investment process developed by Gary
West and James Inglis-Jones. Further information was contained in an
announcement made on 16 June 2006 and in a circular sent to shareholders on
that date and in a subsequent announcement made on 7 July 2006.
Following satisfaction of each of the conditions to the Agreement, completion
of the Agreement in accordance with its terms occurred on 12 July 2006 and the
Company's holding in Liontrust European Investment Services Limited reduced to
51%. The remaining 49% is held by Gary West, James Inglis-Jones, William
Pattisson and Jeremy Lang.
Liontrust International (Cayman) Limited
The Company has decided to domicile its alternative investment funds in
Guernsey. Accordingly, on 12 September 2006 Liontrust International (Cayman)
Limited appointed liquidators and commenced voluntary liquidation, a process
that is expected to be complete by 31 March 2007.
Share repurchases
During the six months to 30 September 2006, the Company purchased 160,000
ordinary shares in the market for cancellation at an average price of 350p per
share (excluding costs). The purchases were made because opportunities arose to
acquire the Company's shares at prices that the Directors considered to be
attractive.
These share repurchases total approximately 0.45% of our issued share capital.
The benefit to our earnings per share will be seen in the second half of the
financial year and in future years. After the cancellations, there are
35,006,056 shares in issue.
Related party transactions
During the period the Group received fees from unit trusts under management of
£12,361,000 (2005: £11,140,000). Transactions with these unit trusts comprised
creations of £115,055,000 (2005: £43,795,000) and liquidations of £196,908,000
(2005: £315,245,000). 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 2006 the Group owed the unit trusts £591,000
(2005: £4,661,000) in respect of unit trust creations and was owed £2,967,000
(2005: £7,393,000) in respect of unit trust cancellations and fees.
This announcement constitutes non-statutory accounts under section 240 of the
Companies Act 1985. The results for the six months to 30 September 2006 are
un-audited. The financial information for the year ended 31 March 2006 has been
abridged from the financial statements which received an unqualified audit
report and which has been filed with the Registrar of Companies and did not
contain a statement under section 237(2) or (3) of the Companies Act, 1985.
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