Preliminary Results
Embargoed until 0700 hours, Wednesday 1st June 2005
STOCK EXCHANGE ANNOUNCEMENT
LIONTRUST ASSET MANAGEMENT PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED
31ST MARCH 2005
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 31st March 2005.
Highlights are as follows:
- 20% growth in profit before tax to £10.95 million.
- 19% growth in core operating profit to £10.1 million.
- Core earnings per share, at 23.64 pence, up 4% on last year.
- 43% increase in total proposed core dividend for the year. 8.75 pence
per share core final dividend (core total for the year 10.75 pence compared
with 7.5 pence the previous year).
- Average funds under management over the year up 23% at £5.023 billion.
Over the same period the FTSE All-Share Index rose by 12%. Funds under
management at year end, at £4.403 billion, fell by 13% from 31st March 2004due
to pension fund withdrawals.
- Core operating profit per head up by 38% and core revenue per head up
by 35%.
- Net unit trust sales £184 million.
Commenting on the results, Nigel Legge, Chief Executive, said:
'We have increased our profits, core earnings per share and dividend for the
fifth consecutive year. We have controlled our costs and our cost: income ratio
has fallen again; we have increased our cash. The business is in good shape.
The reduction in funds under management has been partially offset by the level
of unit trust sales which carry a higher management fee. Whilst our investment
performance has been more mixed than in previous years, long term performance
in all funds remains good.
We have a clear strategy to broaden our product range and see exciting
opportunities ahead.'
- 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 another set of good results. The business has made
healthy financial progress, although our investment performance has been more
mixed than in previous years.
Our income is generated in two main ways. We have recurring fees from funds
under management which make up our core earnings and we have performance
related fees which are only earned if our investment performance on particular
funds exceeds agreed benchmarks. Performance fee income is variable, so we
focus primarily on 'core' earnings when assessing our progress. Our profits
before tax in the year to 31st March 2005are £10.95 million, up 20% from £9.1
million a year ago. Our control over costs has led to a core cost: income ratio
of 63.4%, down from 64.4% last year. Core earnings per share have increased by
4% to 23.64 pence from 22.65 pence last year. The percentage increase in core
earnings per share is less than the increase in core profits due to the
unusually low tax charge last year. Your board has decided to recommend a
final core dividend of 8.75 pence per share, payable on 14th July 2005to
shareholders on the register at 17th June 2005, the shares going ex-dividend on
15th June 2005. With the 2 pence interim dividend already paid, the total core
dividend for the full year amounts to 10.75 pence per share, an increase of 43%
on last year's 7.5 pence per share. The dividend is covered 2.2 times by core
earnings per share.
We earned no performance fees this year whereas last year they contributed £
0.34 million, after compensation, to total profits before tax of £9.1 million.
Our dividend policy remains to grow our core dividend progressively and, in
normal circumstances, pay out any performance related profits as special
dividends. This year, because no performance fees were earned, there is no
special dividend. Last year the special dividend was 0.75 pence per share
taking the final total dividend to 8.25 pence per share.
On 31st March 2005funds under management stood at £4.403 billion. On 31st March
2004funds under management stood at £5.035 billion with £145 million in
transition. A net £1.1 billion of pension fund assets were withdrawn in the
year to 31st March 2005, while net unit trust sales were £184 million. Our
funds under management therefore have decreased by 13% during a year in which
the FTSE All-Share index rose 12%. Funds under management on 31st May 2005stood
at £4.369 billion. Average funds under management, at £5.023 billion, were 23%
higher than the previous year.
Over the year we averaged 37 employees and core operating profits per employee
were £272,000 with core revenues per head at £743,000. This level of
productivity is a credit to our staff's hard work and I thank them all
enormously.
The loss of over £1 billion of institutional pension fund mandates is
disappointing but reflects the underperformance against their benchmarks of our
Growth and Large Cap investment processes in the last couple of years. In
addition, the continued popularity of hedge funds has hurt. We believe a
significant proportion of the assets that have been withdrawn have moved to
'absolute return' investment strategies. It is important to remember, however,
that both the Growth and Large Cap investment processes have good longer term
performance records and we are confident that in time they will perform well
again.
From a financial perspective the effect of losing the pension fund mandates has
been partially offset by the level of unit trust sales on which there is a
higher fixed fee. The overall profitability of the business is a function of
both margin and funds under management. In addition, the way we are organised
has contributed to the increase in profitability.
In current market conditions we believe it is right to focus on delivering good
performance from our investment processes. Our other investment products: the
Income Fund and Intellectual Capital Trust (i.e. our value and smaller
companies investment processes respectively) have performed well and we
anticipate further growth.
During the year we explored the possibility of taking the Company private. This
was in the context of our emerging plans to expand into new asset classes with
new investment teams and individuals but in a way that does not put our
existing business at risk. The objective remains to widen our product range;
to help achieve this we will need to identify new employee incentive schemes
that provide long term rewards for long term performance.
Our market is highly competitive but we remain confident that the strong
business model that has made Liontrust successful since 1995 will continue to
give us a competitive advantage and provides an excellent platform from which
to deliver our strategy. We are excited about moving the business forward and
see opportunities to do so. We continue to see a bright future for the company
and all those associated with it.
Our Annual General Meeting will be held in the Beaufort Room at The Savoy
Hotel, Strand, London WC2R 0EU at 11.00am Friday 8th July 2005 and I hope many
of our shareholders will be with us then.
Bernard Asher
Chairman
31st May 2005
Unaudited Consolidated Profit and Loss Account
for the Year Ended 31st March 2005
Year ended Year ended
31st March 2005 31st March 2004
Notes £'000 £'000
Turnover (Gross profit) 27,499 24,485
Staff costs (13,272) (11,363)
Exceptional staff costs - (189)
Total staff costs (13,272) (11,552)
Total operating charges (4,172) (4,327)
Operating Profit 10,055 8,606
Interest receivable 896 464
Profit on ordinary activities before 10,951 9,070
taxation
Tax on profit on ordinary activities (3,168) (1,536)
Profit on ordinary activities after 7,783 7,534
taxation
Dividends paid and proposed 3 (3,554) (2,890)
Profit for the financial period transferred 4,229 4,644
to reserves
Pence Pence
Basic earnings per share 2 23.64 22.98
Basic earnings per share (adjusted) 2 23.64 23.39
Basic earnings per share (core) 2 23.64 22.65
Diluted earnings per share 2 23.38 22.29
Diluted earnings per share 2 23.38 22.68
(adjusted)
Diluted earnings per share (core) 2 23.38 21.97
Unaudited Consolidated Balance Sheet
as at 31st March 2005
31st March 2005 31st March 2004
(Restated)
£'000 £'000 £'000 £'000
Fixed assets
Tangible assets 227 299
Current assets
Short-term investments 315 197
Debtors 30,847 23,615
Cash at bank and in hand 26,140 15,813
57,302 39,625
Creditors: (amounts falling due within (44,235) (30,529)
one year)
Net current assets 13,067 9,096
Total assets less current 13,294 9,395
liabilities
Capital and reserves
Called up share capital 352 350
Share premium account 8,878 8,630
Profit and loss account 11,311 7,082
Own shares held by the Liontrust
Asset Management Employee Trust
(7,247) (6,667)
Shareholders' funds (all equity 13,294 9,395
interests)
Unaudited Consolidated Cash Flow Statement
for the Year Ended 31st March 2005
Reconciliation of operating profit to net cash inflow from operating activities
Year ended Year ended
31st March 2005 31st March 2004
£'000 £'000
Operating profit 10,055 8,606
Exceptional staff costs - (314)
Depreciation charges 105 104
(Increase) in short term (118) (23)
investments
(Increase)/ decrease in debtors (7,232) 8,391
Increase/ (decrease) in creditors 12,186 (3,493)
Net cash inflow from operating activities 14,996 13,271
Cash Flow Statement
Net cash inflow from operating activities 14,996 13,271
Returns on investment and servicing of 896 464
finance
Taxation (2,306) (2,066)
Capital expenditure and financial (613) (3,330)
investment
Equity dividends paid (2,896) (4,294)
10,077 4,045
Financing 250 1,853
Increase in cash 10,327 5,898
Notes to the Financial Statements
1. Accounting policies
The accounting policies are consistent with those set out in the Group's last
audited accounts.
2. 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 32,924,922
(2004: 32,237,093). 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.
Basic earnings per share (adjusted) are calculated after removing the
exceptional items and associated tax credit/ (charge). Basic earnings per share
(core) are calculated after removing the exceptional items, the performance
related fees and costs and related tax charges.
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 31st
March 2005. The adjusted weighted average number of Ordinary Shares so
calculated for the year was 33,292,740 (2004: 33,797,605)
3. Proposed dividend
The Board will propose a final core dividend of 8.75 pence per share, payable
on 14th July 2005to all shareholders on the register at 17th June 2005.
Year Year
Ended Ended
31st March 2005 31st March 2004
Pence £'000 Pence £'000
per per
share share
Interim dividend paid 2.00 662 1.50 495
(core)
Final dividend proposed 8.75 2,892 6.00 1,986
(core)
Total core dividend 10.75 3,554 7.50 2,481
Special dividend proposed - - 0.75 248
Current year dividend 10.75 3,554 8.25 2,729
Final dividend 2003 - - - 161
10.75 3,554 8.25 2,890
4. Analysis of profit for the year
The table below shows the split in revenues between core and performance
related earnings:
Core Performance Total Core Performance Total
earnings related 31st earnings related 31st
March
March 2004
2005
£'000 £'000 £'000 £'000 £'000 £'000
Turnover 27,499 - 27,499 23,723 762 24,485
Staff
compensation (13,272) - (13,272) (10,944) (419) (11,363)
Other
operating costs (4,172) - (4,172) (4,327) - (4,327)
10,055 - 10,055 8,452 343 8,795
Exceptional
Costs - (189)
Operating
Profit 10,055 8,606
Interest 896 464
Profit before
10,951 9,070
Tax
This preliminary announcement constitutes non-statutory accounts under section
240 of the Companies Act 1985. The results for the year ended 31st March
2005are unaudited. The results for the year to 31st March 2004 have been
extracted from the Group's statutory accounts for that period, which have
been filed with the Registrar of Companies, the audit report on which was not
qualified and did not contain a statement under section 237(2) or (3) of the
Companies Act 1985.
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