Preliminary Results

Embargoed until 0700 hours, Wednesday 24 May 2006 STOCK EXCHANGE ANNOUNCEMENT LIONTRUST ASSET MANAGEMENT PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2006 Liontrust Asset Management PLC ("Liontrust" or "the Group"), the independent specialist UK equities fund management group, today announces its preliminary results for the year ended 31 March 2006 prepared under IFRS. The results for comparative periods have been restated from UK GAAP to IFRS. Highlights are as follows: * Funds under management on 31 March at £5.074 billion increased by 15% from £4.403 billion at previous year end. * Average funds under management over the year down 10% at £4.543 billion. * Costs well controlled and the cost: income ratio improves from 65% to 64%. * Profit before tax at £10.523 million 2% lower than last year's £10.699 million. * Basic earnings per share at 22.69 pence 0.5% less than 22.80 pence in 2005. * 5% increase in the proposed final dividend for the year to 9.2 pence per share. Commenting on the results, Nigel Legge, Chief Executive, said: "These are strong results bearing in mind average funds under management were down during the year. As at 31 March 2006, they stand 12% higher than the year's average. We have reduced our cost: income ratio, increased our margin (profit before tax divided by average funds under management) and our dividend is up. We have also added two new fund managers and established an innovative infrastructure for broadening our product range to include European equity products in the near future. Performance has been stronger in the last twelve months on our Growth and Large Cap processes. Most portfolios with performance fee structures are based on these two processes." - ENDS - For further information please contact: Liontrust Asset Management PLC: Nigel Legge, Chief Executive Tel: 020-7412 1700 JP Morgan Cazenove Limited: Edward Squire, Corporate Finance Tel: 020-7588 2828 Chairman's Statement It is pleasing to report robust results. The past year presented challenges, starting with a period of underperformance from two of our processes. A further challenge was to take the first steps to implement our strategy for growth. We recruited a team to develop an investment process for European equities who started with us on 1 March 2006. The business has made healthy financial progress. Funds under management at our year end were up, margins were up, our cost: income ratio is down and our dividend is up. Profits before tax are modestly down reflecting the impact of IFRS and the lower average funds under management during the year. Profits before tax in the year to 31 March are £10.523 million, compared with £ 10.699 million a year ago. Despite gross profit being down by 4% at £26.473 million, our cost: income ratio has fallen from 65% to 64%. Basic earnings per share were down slightly to 22.69 pence from 22.80 pence last year. Your board has decided to recommend a final dividend of 9.2 pence per share, payable on 13 July 2006 to shareholders who are on the register as at 16 June 2006, the shares going ex-dividend on 14 June 2006. The total dividend for the full year, with the 2.1 pence per share interim dividend already paid, amounts to 11.3 pence per share, an increase of 5% on last year's 10.75 pence per share. The dividend is covered twice by basic earnings per share. The Group generates income in three ways. We have recurring fund management fees, performance related fees, which are only earned if our investment performance on particular funds exceeds agreed benchmarks on a high watermark basis, and trading income on the sale and repurchase of unit trusts. Performance fee income is variable so we focus on recurring fund management fees and trading income as revenue. Performance fees of £35,000 were low this year and are included in revenue. On 31 March 2006 funds under management stood at £5.074 billion. On 31 March 2005 they stood at £4.403 billion and on the same day in 2004 they stood at £ 5.035 billion. Funds under management on 23 May 2006 stood at £4.713 billion. Average funds under management, at £4.543 billion, were 10% lower than the average for the previous year. A net £268 million of pension fund assets were withdrawn during the year while net unit trust redemptions were £128 million. The second half of the year was encouraging in terms of more positive fund flows. In the second half net unit trust sales were £9 million showing that £137 million of net unit trust redemptions occurred in the first half. Over the year our staff complement averaged 37. On average each generated £ 258,000 in operating profit and £715,000 in gross profit. This level of productivity is high for a fund management company and is a direct result of our successful structure and the high level of professionalism and competence of our staff. I thank them all again for doing what they do so well. We attach great importance to continuity of staff, and with good reason. Appropriate incentivisation, an energetic and dynamic working environment and a bright future for the firm will all play their part in keeping the team together and motivated. A recent actuarial survey showed that 62% of fund managers have changed jobs in the last three years. Shareholders may be interested to know that Jeremy Lang and William Pattisson, our Joint Investment Directors, first started working together twenty years ago. Anthony Cross, our Small Cap Director, has been with us for eight years. Nigel Legge, our Chief Executive, and Vinay Abrol, our Chief Operating Officer, have worked together since 1989 and several other directors have worked at Liontrust since 1995. Our two new fund managers, Gary West and James Inglis-Jones have worked together for 9 years, many of those with William Pattisson prior to his arrival at Liontrust in 1999. We have developed what we believe is an innovative structure for attracting new fund managers and continue to explore ways in which to incentivise further our existing staff. With the objective of aligning management incentive with shareholder reward we have created a subsidiary which enables us to offer equity to our new European team. This structure can be replicated when we extend our business to other product areas. We have maintained our compensation ratio again this year. The formula has been in place since our flotation in 1999. It remains a useful management tool and is explained in full detail in the Remuneration Report. Total compensation costs have been held at 55% of pre-compensation profit which, we believe, is low for a fund management company. However, the ratio is certainly not based on a low reward culture. We are generous to our staff through bonuses. They deserve it. The performance of unit trusts based on our Growth and Large Cap processes has picked up during the period. Specific performance statistics are widely available from many sources including our own website. We expect the improving performance of portfolios based on our Growth and Large Cap investment processes to continue for the foreseeable future. This presents us with new opportunities to win more business. The rolling five year performance of our First Income unit trust over the last ten years, all with the same fund manager, makes it one of the best performers of its type in the country; hence it has grown to over £1.3 billion in size with over fourteen thousand investors. It remains popular with advisers and fund supermarkets, thus the prospects for respectable levels of net sales are healthy. It has achieved an average annualised total return of 13.8% over the period. The fund management sector has changed markedly in the 11 years of the Group's life. Fund management companies with specialised focus or process have become established and accepted and the large multi-product companies are increasingly anxious to distribute the product. These changes are putting pressure on margins at a time of rising employment costs in the industry. Our answer to that has been and will remain to use outsourcing allowing the Group to concentrate its resources on fund management. We believe in the importance of transparency. This runs through everything we do from documenting our investment processes and risk monitoring procedures to reporting to clients and shareholders. We think we are well prepared for the challenges ahead. We are in a good position to attract new fund management talent. We see no reason to be hasty in developing new products in new areas. We have a well balanced client base developed over a number of years. We have a healthy balance between accounts on fixed fees and accounts on performance related fees. We have a talented team of professionals who have worked together for a long time. We have good long term performance across all our funds. Our Growth and Large Cap funds in particular have had a good 12 months. We have cash in the bank and respectable margins and a cost: income ratio which we believe means that we would still be profitable if the FTSE 100 Index fell to 1968. We have a strong partnership culture with the stability and continuity that we value. The future is bright and we can't wait to get into it. Bernard Asher Chairman 23 May 2006 Unaudited Consolidated Income Statement for the year ended 31 March 2006 Year Year ended ended 31 March 2006 31 March 2005 £'000 £'000 Continuing operations Revenue 26,887 28,321 Cost of sales (414) (681) Gross profit 26,473 27,640 Administrative expenses 2 (16,941) (17,837) Operating profit 9,532 9,803 Interest receivable 991 896 Profit before tax 10,523 10,699 Taxation (3,275) (3,192) Profit for the period 7,248 7,507 Memo - Dividends (3,511) (2,896) Pence Pence Basic earnings per share 3 22.69 22.80 Diluted earnings per share 3 22.52 22.55 Unaudited Consolidated Balance Sheet as at 31 March 2006 31 March 2006 31 March 2005 £'000 £'000 Non current assets Property, plant and equipment 161 227 Deferred tax assets 239 209 400 436 Current assets Receivables 13,799 31,134 Assets held at fair value through profit 579 315 and loss Cash and cash equivalents 22,238 26,140 36,616 57,589 Liabilities Current liabilities Payables (21,706) (41,381) Accruals (359) (932) (22,065) (42,313) Net current assets 14,551 15,276 Net assets 14,951 15,712 Shareholders' equity Ordinary shares 352 352 Share premium 8,900 8,878 Retained earnings 18,279 13,729 Own shares held (12,580) (7,247) Total equity 14,951 15,712 Unaudited Consolidated Cash Flow Statement for the year ended 31 March 2006 Year Year ended ended 31 March 2006 31 March 2005 £'000 £'000 Cash flows from operating activities Cash inflow from operations 26,582 27,548 Cash outflow from operations (16,883) (17,060) Cash (outflow)/inflow from changes in unit (2,523) 4,508 trust receivables and payables Net cash generated from 7,176 14,996 operations Interest received 991 896 Tax paid (3,248) (2,306) Net cash from operating 4,919 13,586 activities Cash flows from investing activities Sale/(purchase) of property and equipment 1 (33) Net cash from investing 1 (33) activities Cash flows from financing activities Net proceeds from issue of new shares 22 250 Purchase of own shares (5,333) (580) Dividends paid to shareholders (3,511) (2,896) Net cash used in financing (8,822) (3,226) activities Net (decrease)/increase in cash and cash (3,902) 10,327 equivalents Opening cash and cash 26,140 15,813 equivalents* Closing cash and cash 22,238 26,140 equivalents * 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 on the Transition to International Financial Reporting Standards press release dated 13 October 2005. 2. Administration expenses Year ended Year ended 31 March 31 March 2006 2005 £'000 £'000 Staff costs - Director and employee costs 12,837 13,272 - Share option expense 813 372 - Share option NI liability 95 18 - Holiday pay costs 13 3 Other administration expenses 3,183 4,172 16,941 17,837 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 for the year was 31,942,107 (2005: 32,924,922). 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 that were in existence at 31 March 2006. The adjusted weighted average number of Ordinary Shares so calculated for the year was 32,191,237 (2005: 33,292,740). 4. Dividends The directors recommend a final dividend of 9.2 pence per share (2005: 8.75 pence), which will be proposed at the Company's Annual General Meeting on 7 July 2006. If approved this will be paid on 13 July 2006 to all shareholders on the register as at 16 June 2006. The shares will go ex-dividend on 14 June 2006. This preliminary announcement constitutes non-statutory accounts under section 240 of the Companies Act 1985. The results for the year ended 31 March 2006 are unaudited. The results for the year to 31 March 2005 have been extracted from the restated accounts contained in the Financial Information on the Transition to International Financial Reporting Standards press release dated 13 October 2005.

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