Interim Results
Embargoed until 0700 hours, Friday 11th November 2005
LIONTRUST ASSET MANAGEMENT PLC
Interim results for the six months to 30th September 2005
Liontrust Asset Management PLC ('Liontrust' or 'the Group'), the independent
specialist UK equities fund management group, today announces its interim
results for the six months ended 30th September 2005.
* Profits before tax increased marginally to £5.27 million on reduced average
funds under management of £4.36 billion. On 30th September 2005 funds under
management stood at £4.46 billion.
* Profits before tax as a percentage of average funds under management up 14%
to 0.24%.
* Cost: income ratio better at 63.8% from 64.4%.
* Basic earnings per share rose 1.6% to 11.20 pence.
* Interim dividend increased by 5% to 2.1 pence.
Commenting on these results, Nigel Legge, Chief Executive said:
'These are another solid set of results. Our cost income ratio and profits
before tax have improved despite a fall in funds under management.
Investment performance across our Large Cap and Growth portfolios has improved
recently. The Income and Small Cap unit trusts have continued to do well. We
launched a new unit trust on 10th November which is managed by our highly
successful UK small cap manager, Anthony Cross, and are working on some new
product initiatives. Some of these can be developed in-house while others will
require recruitment.
As the Chairman says in his statement, these results have been prepared using
the new IFRS reporting standards and the prior period comparatives have also
been restated to reflect this. This has been a considerable amount of work,
hence the slight delay in releasing our interim results this year.'
Chairman's Statement
Liontrust's interim results for the six months to 30th September 2005 have been
prepared under the International Financial Reporting Standards ('IFRS') regime.
Results for comparative periods have been restated from a UK Generally Accepted
Accounting Principles ('UK GAAP') basis to an IFRS basis.
The average level of funds under management over the six month period was £4.36
billion and 14% lower than the corresponding level of £5.05 billion for the six
months to 30th September 2004. On 30th September 2005 our funds under
management stood at £4.459 billion and £4.425 billion on 9th November 2005.
Profit before tax, however, increased marginally to £5.27 million, compared
with £5.26 million for the same period a year ago. No performance related fees
have been earned during the period so that core and total operating profits are
the same. On an annualised basis profits before tax as a percentage of average
funds managed are up 14% to 0.24% from 0.21% last year.
Core and total basic earnings per share are 11.20 pence, compared with 11.02
pence last year.
Once again we have kept a tight control on costs and as a result the cost:
income ratio has fallen to 63.8% from 64.4% for the same period last year. Our
average headcount during the period was 37.
Your Board has declared a 5% increase in the interim dividend to 2.1 pence per
share from 2.0 pence a year ago. The dividend will be paid on 13th December to
shareholders on the register on 25th November with an ex-dividend date of 23rd
November.
At the end of September 2005 Liontrust First Income Fund, the unit trust based
on our Value Dynamic investment process, had grown to £1,187 million from £950
million this time last year. Net redemptions of authorised unit trusts during
the period were £137 million. Gross unit trust sales averaged £24 million per
month. Net institutional assets worth £242 million were withdrawn during the
six months to 30th September 2005.
In the ten months to 31st October 2005, the relative performance of the Large
Cap and Growth investment processes has improved. The performance on the other
two processes remains strong. The total return from the First Income unit trust
stands at 9.7%.The unit trust based on our Small Cap process is up by 9.3%
while its benchmark is up by 10.1%. The unit trusts based on our Large Cap and
Growth processes are up by 12.1% and 12.7% respectively compared with their
benchmark, the FTSE All-Share (total return) index which is up by 13.7%.* All
institutional mandates with performance fee structures are based on either the
Large Cap or Growth investment processes. We believe the stock market
environment has returned to one which better suits our Large Cap and Growth
investment processes.
Recent experience supports our view that the nature of our business model,
built around clearly articulated investment processes, is an effective way to
organise a fund management company. It gives the firm an excellent platform on
which to build and add further value.
During the period we have continued to seek opportunities for future profitable
growth and progress has been made. We will report to shareholders at the
appropriate time. We are enthusiastic about our prospects.
Bernard Asher
Chairman
10th November 2005
For further information please contact:
Liontrust Asset Management PLC Nigel Legge 020 7412 1700
JP Morgan Cazenove Richard Locke 020 7155 4706
*All figures sourced from Lipper, bid to bid basis, income reinvested.
Consolidated Income Statement
Six months to 30th September 2005
Note Six Six Twelve
months months months
to 30.9.05 to 30.9.04 to 31.3.05
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Continuing operations
Revenue 472,624 412,473 676,966
Cost of sales (459,544) (398,811) (649,326)
Gross profit 13,080 13,662 27,640
Other income 47 - -
Administrative expenses (8,376) (8,802) (17,837)
Operating profit 4,751 4,860 9,803
Interest receivable 514 397 896
Profit before tax 5,265 5,257 10,699
Taxation 2 (1,644) (1,609) (3,192)
Profit for the period 3,621 3,648 7,507
Memo - Dividends (2,892) (2,234) (2,896)
Pence pence pence
Basic earnings per share 3 11.20 11.02 22.80
Diluted earnings per share 3 11.20 10.89 22.55
Consolidated Balance Sheet
At 30th September 2005
30.9.05 30.09.04 31.3.05
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Non current assets
Property, plant and 177 261 227
equipment
177 261 227
Current assets
Debtors 15,663 15,739 31,134
Deferred tax assets 157 213 209
Short term investments 474 208 315
Cash and cash 25,272 17,465 26,140
equivalents
41,566 33,625 57,798
Liabilities
Current liabilities
Creditors (27,722) (20,052) (41,381)
Accruals (628) (1,202) (932)
(28,350) (21,254) (42,313)
Net current assets 13,216 12,371 15,485
Net assets 13,393 12,632 15,712
Shareholders' equity
Ordinary shares 352 350 352
Share premium 8,878 8,630 8,878
Retained earnings 14,709 10,319 13,729
Own shares held (10,546) (6,667) (7,247)
Total equity 13,393 12,632 15,712
Consolidated Cash Flow Statement
Six months to 30th September 2005
Six Six Twelve
months months months
to 30.9.05 to 30.9.04 to 31.3.05
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Cash flows from operating
activities
Cash inflow from operations 488,221 420,528 690,328
Cash outflow from operations (481,747) (416,249) (675,332)
Net cash generated from 6,474 4,279 14,996
operations
Interest received 514 397 896
Tax paid (1,687) (773) (2,306)
Net cash from operating 5,301 3,903 13,586
activities
Cash flows from investing
activities
Purchase of property and 22 (17) (613)
equipment
Available for sale (3,299) - -
investments
Net cash from investing (3,277) (17) (613)
activities
Cash flows from financing
activities
Net proceeds from issue of - - 250
new shares
Dividends paid to (2,892) (2,234) (2,896)
shareholders
Net cash used in financing (2,892) (2,234) (2,646)
activities
Net (decrease)/increase in (868) 1,652 10,327
cash and cash equivalents
Opening cash and cash 26,140 15,813 15,813
equivalents
Closing cash and cash 25,272 17,465 26,140
equivalents
Consolidated Statement of Changes in Equity
Six months to 30th September 2005
Share Share Retained Own Total
shares
capital premium earnings held equity
£ '000 £ '000 £ '000 £ '000 £ '000
Balance at 352 8,878 13,729 (7,247) 15,712
1st April
2005
brought
forward
Purchase - - - (3,299) (3,299)
of shares
by EBT
Profit for - - 3,621 - 3,621
the period
Total - - 3,621 - 3,621
recognised
income for
the year
Dividends - - (2,892) - (2,892)
Issue of - - - - -
share
capital
Equity - - 251 - 251
share
options
issued
Balance at 352 8,878 14,709 (10,546) 13,393
30
September
2005
Notes to the Financial Statements
1. Principle accounting policies
a) Basis of preparation
The unaudited interim financial information, which has been approved by the
Board of Directors, has been prepared on the basis of the accounting policies
(as set out below) which comprise standards and interpretations approved by the
European Union. Comparative information has been adjusted accordingly.
The interim financial information has been prepared on the basis of the
Company's expectation of the standards that will be applicable as at 31st March
2006.
Further standards and interpretations may be issued that could be applicable
for financial years beginning on or after 1st April 2005 or that are applicable
to later accounting periods but with the option for companies to adopt for
earlier periods. The Company's first annual financial statements prepared under
IFRS may, therefore, be prepared in accordance with accounting policies
different from those used in the preparation of the financial information in
this report. At this interim stage, before the Company's first annual financial
statements under IFRS are completed, it should be noted that the financial
information in this report could be subject to change.
In accordance with the transitional provisions set out in IFRS 1 `First-time
Adoption of International Financial Reporting Standards' and other relevant
standards, the Company has applied IFRS expected to be in force as at 31st
March 2006 in its financial reporting with effect from 1st April 2004, with the
exception of the standards relating to financial instruments which were applied
with effect from 1st April 2005 as described below.
The financial information contained within this Interim Report has been
prepared under the historical cost convention (except for the measurement of
financial assets at fair value through profit or loss which are held at fair
value).
b) First time adoption of IFRS
Under IFRS 1 `First-time adoption of International Financial Reporting
Standards' there are a number of exemptions from other IFRS which may be
utilised at the point of initial adoption. The Company has taken advantage of
two of these exemptions as follows:
The Company has elected, for share based payments made prior to 7th November
2002, not to calculate a charge to the income statement.
IFRS 1 includes specific transitional provisions for IAS 32 and 39. The Company
has decided to take advantage of these provisions and therefore has not applied
these standards to the comparative figures, under which financial instruments
are included using the measurement bases and the disclosure requirements of UK
GAAP relating to financial instruments.
c) Basis of consolidation
The consolidated financial information incorporates the results of the Company
and all its subsidiaries.
d) Fixed assets and depreciation
Leasehold improvements and furniture are included at cost and are depreciated
over the lower of the estimated useful life and the lease term, which is ten
years.
Office equipment is included at cost and is depreciated over the estimated
useful life of the asset, which is between three and ten years.
Computer equipment is included at cost and is depreciated over the estimated
useful life of the asset, which is three years.
At each reporting date management reviews its fixed assets and assesses whether
any assets may be impaired.
e) Short term investments
The Company holds short term investments, which are unit trust units held in
the `manager's box' to ease the calculation of daily creations and
cancellations of units. These box positions are not held to create speculative
proprietary positions but are managed in accordance with specified criteria and
authorisation limits.
Accounting polices applicable up to 31st March 2005.
The manager's box is held in the balance sheet at the lower of cost and net
realisable value.
Accounting policy applicable from 1st April 2005
These units are held at fair value through profit or loss and are valued on a
bid price basis.
f) Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash equivalents are
short-term, highly liquid investments that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of change in
value. Under IFRS cash and cash equivalents are included in the cash flow
statement.
g) Own shares
Own shares held by the Liontrust Asset Management Employee Trust are valued at
cost and are shown as a deduction from the Group's shareholders' equity. No
gains or losses are recognised in the income statement.
h) Operating leases
Leases in which a significant portion of the risks and rewards of ownership are
retained by the lessor are classified as operating leases. Payments made under
operating leases (net of any incentives received from the lessor) are charged
to the income statement on a straight-line basis over the period of the lease.
i) Income and expenses
Income and expenses are accounted for on an accruals basis when they become
receivable or payable.
Front end fees received and commissions paid on the sales of units in unitised
funds are amortised over the estimated life of the unit.
Performance fees are recognised in the period in which they become due and
collectable. Any portion of performance fees that are not due and collectable,
and whose future entitlement is not certain, is not recognised but noted as a
contingent asset.
j) Deferred taxation
Deferred taxation is accounted for on an undiscounted basis at expected tax
rates on all differences arising from the inclusion of items of income and
expenditure in tax computations in periods different from those in which they
are included in the financial information. A deferred tax asset is only
recognised when it is more likely than not that an asset will be recoverable in
the foreseeable future out of suitable taxable profits from which the
underlying timing differences can be deducted.
k) Pensions
The Company operates defined contribution schemes for its employees. The assets
are invested with insurance companies and are held separately from the Company.
The costs of the pension scheme are recognised in the consolidated income
statement in the period in which they are incurred.
l) Employee share options
The Company operates a number of share options schemes for employees. The
services received from the employees are measured by reference to the fair
value of the share options. The fair value of the options issued is calculated
at grant date and is recognised in the consolidated income statement over the
vesting period. IFRS 2 has been applied, in accordance with IFRS 1, to share
options granted after 7th November 2002 (note b).
m) Dividends
Equity dividends to the shareholders of the Company are recognised as a
liability in the period during which they are declared.
n) Holiday pay accrual
Under IAS 19, all accumulating employee compensated absences that are unused at
the balance sheet date are recognised as a liability.
2. Taxation
The interim tax charge has been calculated at the estimated full year effective
corporation tax rate of 30% (2004: 30%).
3. 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 32,317,322 for the
six months ended 30th September 2005, 33,099,510 for the six months ended 30th
September 2004 and 32,924,922 for the year ended 31st March 2005.
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 2005. The adjusted weighted average number of
ordinary shares so calculated was 32,319,157 for the six months ended 30th
September 2005, 33,510,931 for the six months ended 30th September 2004 and
33,292,740 for the year ended 31st March 2005.
In accordance with the methodology set out in the Annual Report & Accounts we
have stated two further measures of basic and diluted earnings per share. The
adjusted figure is calculated after removing the exceptional item and
associated tax charge/ credit. The core figure is calculated after removing the
exceptional item, the performance related fees and costs and related tax
charges. These additional measures of earnings are shown below.
30.9.05 30.9.04 31.3.05
Pence pence Pence
Basic earnings per share 11.20 11.02 22.80
(adjusted)
Basic earnings per share (core) 11.20 11.02 22.80
Diluted earnings per share 11.20 10.89 22.55
(adjusted)
Diluted earnings per share 11.20 10.89 22.55
(core)
4. Dividends
The directors propose to pay an interim dividend in respect of the current
period of 2.1 pence per share (2004: 2.0 pence) payable on 13th December 2005
to shareholders on the register at the close of business on 25th November 2005
with and ex-dividend date of 23rd November 2005.
5. Liontrust Enterprise Management Incentive Scheme
In the 2002 Annual Report and Accounts it was stated that the Liontrust
Enterprise Management Incentive Scheme (the 'Scheme') would be operated on the
basis that options granted to eligible employees will be split 50/50 between
options to subscribe and options to purchase and that the number of new shares
which can be issued pursuant to options under the Scheme in any rolling ten
year period is limited to 10% of the issued ordinary share capital of the
Company. The Remuneration Committee and the Trustees of the Liontrust Asset
Management Employee Trust wish to notify shareholders of a change to the basis
on which they may operate the Scheme in future. It is intended that they may
vary the ratio between options to subscribe and options to purchase as they
deem appropriate. The number of new shares which can be issued pursuant to
options under the Scheme in any rolling ten year period will continue to be
limited to 10% of the issued ordinary share capital of the Company. For the
next grant of options they intend that options to purchase will make up over
50% of the options.
6. IFRS reconciliations
Reconciliations of the consolidated income statement and consolidated balance
sheet for the six months to 30th September 2004 and the year ended 31st March
2005 between UK GAAP and IFRS are set out below. Reconciliations of the
consolidated cash flow statements have not been included since there are no
IFRS adjustments to them.
The financial information on the transition to International Financial
Reporting Standards press release dated 13th October 2005 contains
reconciliations of the primary financial statements for the year ended 31st
March 2005 from UK GAAP to IFRS, together with explanations of those
reconciling items.
a. Consolidated income statement for the six months to 30th September 2004
To 30th IFRS To 30th
September 2004 Adjustments September 2004
£'000 £'000 £'000
Under Under
UK GAAP* IFRS
Continuing operations
Revenue 412,580 (107) 412,473
Cost of sales (398,988) 177 (398,811)
Gross profit 13,592 13,662
Administrative (8,659) (143) (8,802)
expenses
Operating profit 4,933 4,860
Interest receivable 397 397
Profit before tax 5,330 5,257
Taxation (1,589) (20) (1,609)
Profit for the year 3,741 3,648
Dividends (662) (1,572) (2,234)
* UK GAAP balances under IFRS format
b. Consolidated balance sheet as at 30th September 2004
As at IFRS As at
30th September Adjustments 30th September
2004 2004
£'000 £'000 £'000
Under Under
UK GAAP* IFRS
Non current assets
Property, plant and 261 261
equipment
261 261
Current assets
Debtors 15,223 516 15,739
Deferred tax assets - 213 213
Short term investments 208 208
Cash and cash 17,465 17,465
equivalents
32,896 33,625
Liabilities
Current liabilities
Creditors (20,682) 630 (20,052)
Accruals - (1,202) (1,202)
(20,682) (21,254)
Net current assets 12,214 12,371
Net assets 12,475 12,632
Shareholders' equity
Ordinary shares 350 350
Share premium 8,630 8,630
Retained earnings 10,162 157 10,319
Own shares held (6,667) (6,667)
Total equity 12,475 12,632
* UK GAAP balances under IFRS format
c. Consolidated income statement for the year ended 31st March 2005
To 31st March IFRS To 31st March
2005 Adjustments 2005
£'000 £'000 £'000
Under Under
UK GAAP* IFRS
Continuing operations
Revenue 676,773 193 676,966
Cost of sales (649,274) (52) (649,326)
Gross profit 27,499 27,640
Administrative (17,444) (393) (17,837)
expenses
Operating profit 10,055 9,803
Interest receivable 896 896
Profit before tax 10,951 10,699
Taxation (3,168) (24) (3,192)
Profit for the year 7,783 7,507
Dividends (3,554) 658 (2,896)
* UK GAAP balances under IFRS format
d) Consolidated balance sheet as at 31st March 2005
As at IFRS As at
31st March 2005 Adjustments 31st March 2005
£'000 £'000 £'000
Under Under
UK GAAP* IFRS
Non current assets
Property, plant and 227 227
equipment
227 227
Current assets
Debtors 30,847 287 31,134
Deferred tax assets - 209 209
Short term investments 315 315
Cash and cash 26,140 26,140
equivalents
57,302 57,798
Liabilities
Current liabilities
Creditors (44,235) 2,854 (41,381)
Accruals - (932) (932)
(44,235) (42,313)
Net current assets 13,067 15,485
Net assets 13,294 15,712
Shareholders' equity
Ordinary shares 352 352
Share premium 8,878 8,878
Retained earnings 11,311 2,418 13,729
Own shares held (7,247) (7,247)
Total equity 13,294 15,712
* UK GAAP balances under IFRS format
7. Post balance sheet date event
On 14th October 2005 the Liontrust Asset Management Employee Trust purchased an
additional 150,000 shares in Liontrust Asset Management PLC. Shares held by the
Employee Trust do not qualify for dividends and are treated as having been
cancelled for the purposes of calculating earnings per share.
This announcement constitutes non-statutory accounts under section 240 of the
Companies Act 1985. The results for the six months to 30th September 2005 are
unaudited. The pre IFRS financial information for the year ended 31st March
2005 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.
- ENDS -
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