Preliminary Results - year ended 31 March 2007
Embargoed until 0700 hours, Tuesday 29 May 2007
LIONTRUST ASSET MANAGEMENT PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED
31 MARCH 2007
Liontrust Asset Management PLC ("Liontrust" or "the Group"), the independent
specialist equities fund management group, today announces record results for
the year ended 31 March 2007.
Results:
* Profit before tax of £11.8 million - up 12%
* Basic earnings per share 26.0p - up 15%
* Performance fees of £2.9 million (last year £35,000)
* Net cash £14.2 million
Funds under management:
* £5.5 billion under management - up 8%
* Now (25 May 2007) £5.7 billion
* Average funds under management for year £5.3 billion - up 16%
* Funds won for New European process exceed £30 million and have a further £
69 million in transition
Dividends:
* Increase of 7% proposed in final dividend to 9.8p per share
* Total dividend for the year 12.0p - up by 6% on last year
* Special dividend of 2.9p proposed to reflect performance fee earnings
Commenting on the results, Nigel Legge, Chief Executive, said:
"These are very good results, bearing in mind that we have absorbed the costs
of establishing our new investment team and launching our European process".
"Prospects are good for attracting new funds, given the initial success of our
European team and the good performance across our range of UK funds".
"We are confident of making good progress again this financial year".
For further information please contact:
Liontrust Asset Management PLC 020 7412 1700
Nigel Legge www.liontrust.co.uk
Vinay Abrol
Altium 020 7484 4040
Garry Levin
Nick Tulloch
Smithfield 020 7360 4900
Reg Hoare
Miranda Good
Chairman's Statement
Introduction
These are solid results in a year that has been busy bedding down a new
investment team, building a new investment process for European equities,
developing new products and maintaining the confidence of existing clients as
performance on portfolios based on our Growth and Large Cap processes recovered
from a couple of years of lacklustre performance. Good progress was made.
The business is in a healthy financial state. Funds under management at our
year-end were up, our cost: income ratio is unchanged at 64% and our dividend
is increased and further boosted by a healthy special dividend, payable from
performance fee earnings.
Results
Profit before tax in the year to 31 March 2007 is £11.824 million, compared
with £10.523 million a year ago.
The Board is recommending a final dividend of 9.8 pence per share, payable on
12 July 2007 to shareholders who are on the register as at 15 June 2007, the
shares going ex-dividend on 13 June 2007. The total dividend for the full year,
with the 2.2 pence per share interim dividend already paid, amounts to 12.0
pence per share: an increase of 6% on last year's 11.3 pence per share.
Performance fees of £2.864 million were earned in the financial year and these
fees generated an operating profit, after compensation, of £1.289 million. This
year, in addition to the final dividend, the board is recommending the payment
of a special dividend of 2.9 pence per share funded from earnings from
performance fees, payable at the same time as the final dividend.
We have £14.2 million of net cash (cash and cash equivalents plus receivables
minus payables) at 31 March 2007 with a further £12.5 million loaned to the
employee benefit trust, which will be returned to the business when all the
options are exercised.
Funds under management and sales
On 31 March 2007 funds under management stood at £5.505 billion. Last year on
31 March 2006 they were £5.074 billion. On 25 May 2007 they had grown to £5.693
billion. Average funds under management for the year were £5.262 billion, 16%
higher than the average for last year.
A net £124 million of institutional assets were withdrawn in the financial year
to date. Gross sales of our unit trusts averaged a healthy £29 million per
month; net sales overall were flat in the financial year.
Our Team
We attach great importance to continuity of staff, and with good reason. They
have done an excellent job this year and I would like to thank them for it.
Appropriate incentives, an energetic, challenging and dynamic working
environment and a bright future for the firm will all play their parts in
keeping the team together and motivated. Employees own 6% of the Company's
shares and a further 19% through share options.
Fund Performance
The unit trusts based on our Growth and Value investment processes have
out-performed their benchmarks in the financial year as did the First
Opportunities fund, a unit trust based on our Small Cap Process. Specific
performance statistics are widely available from many sources including our
recently updated website, www.liontrust.co.uk.
The Liontrust First Income unit trust over the last ten years has achieved an
annualised total return of 14.6%, making it one of the best performers of its
type in the country. It has grown to approximately £1.4 billion in size with
around twelve thousand investors. The core portfolio based on our Small Cap
process had a difficult time when measured against its benchmark index. The
First Opportunities fund, its sister portfolio, which stretches up into mid-cap
stocks, produced an excellent performance. We are confident that investors will
take note of this over the coming year.
New European Team
Gary West and James Inglis-Jones, our new fund management team, have settled in
well and made excellent progress. They completed the work on their process,
supported by members of our existing investment team, in eight months. The
process was documented in November 2006 and a unit trust and long/short
alternative investment fund based on it were launched in November 2006 and
December 2006 respectively. A further fund will be added in early June 2007,
domiciled in Luxembourg. The process has been marketed to existing and
prospective clients in the UK and overseas and has been well received. We have
already raised £30 million and have a further £69 million in transition. The
prospects are good for fund inflows over the coming year.
Transparency
Transparent reporting has always been a cornerstone of everything we do, from
documenting our investment processes and risk management procedures, to
reporting to clients on portfolio performance and shareholders on corporate
performance. We believe in the growing importance of transparency. The way
money is managed and the way fund management companies are organised are
justifiably becoming an important topic in public debate. This will not change.
Outlook
We are well prepared for the challenges ahead. We have a talented team of
professionals who have worked together for a long time. We have a strong
partnership culture with the stability and continuity which, along with a depth
of goodwill across a wide spectrum of clients, we value highly.
We continue to explore opportunities for new products. We are delighted at the
successful launch of our new European product.
We are pleased with how we have started the current financial year and are
therefore confident of making good progress for the year as a whole.
Bernard Asher
Chairman
25 May 2007
Business Review Extract
Dividend Policy
It is our intention to grow our dividend progressively. We believe in aligning
the interests of employees with those of shareholders. Progressive growth of
our dividend stems from growth in profits.
As Liontrust European Investment Services Limited is 51% owned by the Company
it falls below the 75% threshold required by HM Revenue & Customs in order to
qualify for group tax relief. We have reduced the level of dividend cover to
allow for the increased tax charge.
When the Group earns performance related income, employees share in the rewards
through a bonus pool that is determined by the compensation structure. We
believe also that, in the absence of specific requirements to retain additional
cash, shareholders should be rewarded also. This occurs through the payment of
special dividends.
Staff
We have a stable fund management team. The core team have been with the company
for twelve, ten and eight years with the two new fund managers having joined in
March 2006. No fund manager has left the company in the twelve years that we
have been operating. This is particularly compelling considering that a survey
last year by Investment Solutions, a multi-manager investment firm, showed that
62 per cent of UK equity professionals had changed their jobs in the last three
years. One of a fund management business's core exposures is to a reduction of
funds under management. The primary risk that we can mitigate is the loss of
good quality fund managers. This stability in our investment expertise is
critical to the success of the business.
Strategy
The Group's strategy is to build a process driven fund management organisation.
We have successfully built the foundations for this strategy with UK investment
processes and have now added a European equity fund management team. The
business model will stay the same. Headcount intensive functions will continue
to be outsourced thereby keeping headcount low. Investment products will
continue to be aimed at professional investors and advisers rather than to the
public.
Nigel Legge
Chief Executive
25 May 2007
Unaudited Consolidated Income Statement
for the year ended 31 March 2007
Year Year
ended ended
31-Mar-07 31-Mar-06
Notes £'000 £'000
Continuing operations
Revenue 30,236 26,887
Cost of sales (212) (414)
Gross profit 30,024 26,473
Administrative expenses 2 (19,141) (16,941)
Operating profit 10,883 9,532
Interest 941 991
receivable
Profit before tax 11,824 10,523
Taxation (3,809) (3,275)
Profit for the period 8,015 7,248
Memo - Dividends (3,563) (3,511)
Pence Pence
Basic earnings per share 3 26.03 22.69
Diluted earnings per share 3 25.17 22.52
Unaudited Consolidated Balance Sheet
as at 31 March 2007
31-Mar-07 31-Mar-06
£'000 £'000
Non current assets
Property, plant and equipment 128 161
Deferred tax assets 595 239
723 400
Current assets
Receivables 16,075 13,799
Assets held at fair value through profit and loss 455 579
Cash and cash equivalents 22,437 22,238
38,967 36,616
Liabilities
Current liabilities
Payables (24,273) (21,706)
Accruals (470) (359)
(24,743) (22,065)
Net current assets 14,224 14,551
Net assets 14,947 14,951
Shareholders' equity
Ordinary shares 337 352
Share premium 8,907 8,900
Capital redemption reserve 15 -
Retained earnings 18,174 18,279
Own shares held (12,486) (12,580)
Total equity 14,947 14,951
Unaudited Consolidated Cash Flow Statement
for the year ended 31 March 2007
Year Year
ended ended
31-Mar-07 31-Mar-06
£'000 £'000
Cash flows from operating activities
Cash inflow from operations 26,958 26,582
Cash outflow from operations (17,314) (16,883)
Cash inflow/(outflow) from changes in unit 1,304 (2,523)
trust receivables and payables
Net cash generated from operations 10,948 7,176
Interest received 941 991
Tax paid (2,782) (3,248)
Net cash from operating activities 9,107 4,919
Cash flows from investing activities
(Purchase)/sale of property and equipment (28) 1
Net cash from investing activities (28) 1
Cash flows from financing activities
Net proceeds from issue of new 7 22
shares
Net cost of the cancellation of (5,418) -
shares
Sale/(purchase) of own shares 94 (5,333)
Dividends paid to shareholders (3,563) (3,511)
Net cash used in financing (8,880) (8,822)
activities
Net increase/(decrease) in cash and cash 199 (3,902)
equivalents
Opening cash and cash equivalents* 22,238 26,140
Closing cash and cash equivalents 22,437 22,238
* Cash and cash equivalents consist only of cash
balances.
Notes to the Financial Statements
1. Accounting policies
The accounting policies are consistent with those set out in the Financial
Information for the year ended 31 March 2006.
2. Administrative expenses
Year ended Year ended
31-Mar-07 31-Mar-06
£'000 £'000
Staff costs
- Director and employee 14,473 12,837
costs
- Share option expense 861 813
- Share option NI liability 118 95
- Holiday pay costs 24 13
Other administration 3,665 3,183
expenses
19,141 16,941
3. 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 was 30,790,440 for the year
(31,942,107 for the year ended 31 March 2006). 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 basis as set out above,
after adjusting the weighted average number of Ordinary Shares for the effect
of options to subscribe for Ordinary Shares that were in existence during the
year ended 31 March 2007. The adjusted weighted average number of Ordinary
Shares so calculated for the year was 31,839,738 (2006: 32,191,237).
4. Dividends
The directors recommend a final dividend of 9.8 pence per share, which will be
proposed at the Company's Annual General Meeting on 6 July 2007. If approved
this will be paid on 12 July 2007 to all shareholders on the register as at 15
June 2007. The shares will go ex-dividend on 13 June 2007. This year, in
addition to the final dividend, the directors recommend a special dividend of
2.9 pence per share funded from performance fees, payable at the same time as
the final dividend.
Other information
This preliminary announcement constitutes non-statutory accounts under section
240 of the Companies Act 1985. 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.
The Annual Report is scheduled to be posted to shareholders on 6 June 2007.
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.
This preliminary announcement contains certain forward-looking statements with
respect to the financial condition, results of operations and businesses and
plans of the Company. 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.
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