Final Results

RNS Number : 6805N

Liontrust Asset Management PLC

16 June 2010

 



Embargoed until 0700 hours, Wednesday 16 June 2010

LIONTRUST ASSET MANAGEMENT PLC

PRELIMINARY RESULTS FOR THE YEAR ENDED

31 MARCH 2010

Liontrust Asset Management PLC ("Liontrust" or "the Group"), the independent specialist fund management group, today announces its results for the year ended 31 March 2010.

Liontrust has entered a new era after undergoing a great deal of change over the past 18 months. The business has stabilised and is under new leadership, including John Ions (Chief Executive) and Adrian Collins (Executive Chairman). Liontrust has also appointed Chris Edmeades to the Board with immediate effect as Chief Risk Officer and, as previously announced, Graham Hooper has joined as a Non-Executive Director. Together with the existing management, they have the necessary experience to drive the business forward.

Liontrust has taken a number of steps to increase profitability and assets under management. The Group continues to focus on improving efficiencies and costs and a number of initiatives are ongoing. One of the primary areas is that of sales and marketing and we have implemented a more focused strategy. The Group has also continued to expand its product range with the successful launch of the Luxembourg-based Liontrust Credit Absolute Return Fund, which now has more than €20 million in assets.

Allied to our continued strong investment performance and the fact the Group has no debt and more than £20 million in net cash and financial assets, we believe these measures will return Liontrust to net positive sales and increase profitability.

Results:

·      Profit after tax of £1.1 million (2009: £8.5 million)

·      Adjusted profit before tax of £796,000 (2009: £14.3 million) (see note 5)

·      Basic earnings per share 3.6p (2009: 28.3p)

·      Performance fees of £3.4 million (2009: £16.2 million)

Assets under management:

·      On 31 March 2010, assets under management were £1.1 billion (2009: £1.9 billion)

·      On 15 June 2010, assets under management were £1.1 billion

Dividend:

·      No second interim dividend

·      The total dividend for the full year amounts to 2.5 pence per share (2009: 7.5 pence)

Directorate changes:

·      Chris Edmeades joins the Board with immediate effect as Chief Risk Officer

Commenting on the results, John Ions, Chief Executive, said:

"In the four months I have been at Liontrust, I have been able to assess clearly the strengths and weaknesses of the business. Liontrust is essentially a manufacturer and distributor of investment solutions. Our key strength is what comprises the core of any asset management business - the fund management capability, as shown in the table below. This would be the envy of many other firms and will obviously be central to our efforts to return to positive net sales.

"As the manufacturing base is performing strongly, my initial efforts have been focused on the distribution side of the business.

"We are implementing sales and marketing strategies to raise the profile of Liontrust and our fund management capability, re-engage with clients, expand our client base and therefore increase inflows into our range of products.

"This includes a rebranding exercise, which is almost complete and will lead to clearer and more targeted information for our clients. We will begin an advertising campaign in August to further raise awareness of the group's excellent fund performance. The sales focus has been sharpened and new strategies have been put in place that are beginning to produce results.

"I am undertaking a full review of the Group's activities and have already identified further efficiencies that will lead to cost savings and a more focused business while providing a strong platform from which to build.

"Liontrust has been through a difficult period but I am confident the corner has now been turned and am excited about the future. The changes I have mentioned and the continued focus on our core objectives give me great confidence that the next year will be a more successful and rewarding one for employees and investors alike."  

IMA Sector Quartile Ranking by Fund* to 8 June 2010:

Fund	3 months	1 Year	Manager tenure	Manager appointed
Liontrust First Income Fund	1	1	1	25/03/2009
Liontrust First Growth Fund	1	1	1	25/03/2009
Liontrust First Opportunities Fund	1	1	1	11/11/2005
Liontrust First Large Cap Fund	4	4	4	25/03/2009
Liontrust Intellectual Capital Trust	1	1	1	08/01/1998
Liontrust European Absolute Return Fund	3	N/a	4	09/07/2009
Liontrust Continental Europe Fund	1	1	1	15/11/2006
Source: Financial Express, total return.
* UK Retail Funds (excluding Liontrust Top 100 Fund).

For further information please contact:

Liontrust Asset Management        John Ions Vinay Abrol Simon Hildrey	020 7412 1700 www.liontrust.co.uk
Altium Sam Fuller Paul Chamberlain	020 7484 4040

Chairman's Statement

Introduction

This is my first report to shareholders as your chairman and I regret to say that assets under management have continued to fall, now standing at £1.1 billion on 15 June 2010. Our cost base is still too high given our revenue and your new Chief Executive, John Ions, is addressing this and other important issues. He has only been with the company for a short time but his appointment has my full backing and I am delighted he has clearly got to grips quickly with the business issues following the resignation of Nigel Legge in May 2010.

The good news is that we have continued to maintain our fund management strength and our balance sheet is robust with just over £20 million in net cash and financial assets. I believe our client base is now stable - albeit at lower levels of assets under management.

The key to growing assets under management will be our focus on administration, sales and marketing as well as our fund management capability and performance. With an open and honest culture at all levels of management, I see no reason why Liontrust cannot regain its previous financial strength and deliver the returns shareholders expect.

Results

Adjusted profit before tax was £796,000 after adding back expenses for the cost reduction and restructuring programme, depreciation and intangible asset amortisation, severance compensation and expenses related to share incentivisation (2009: £14.332 million).

Assets under management and sales

On 31 March 2010, our assets under management ("AuM") stood at £1.149 billion and were broken down by type and process as follows:-

Process	Total	Institutional	Retail	Offshore Funds
	£m	£m	£m	£m
The Liontrust Cashflow Solution	823	311	470	42
The Liontrust Economic Advantage	245	0	245	0
The Liontrust Credit Process	24	0	0	24
Indexed	57	0	57	0
Total	1,149	311	772	66

A reconciliation of fund flows and assets under management over the year is as follows:-

	Total	Institutional	UK Retail	Offshore Funds
	£m	£m	£m	£m
Opening AuM - 1 April 2009	1,888	1,069	717	102
Inflows	235	29	164	42
Outflows	(1,503)	(937)	(471)	(95)
Net flows	(1,268)	(908)	(307)	(53)
Market movement	529	150	362	17
Closing AuM - 31 Mar 2010	1,149	311	772	66

Assets under management as at 15 June 2010 were £1.057 billion.

Dividend

The Board has considered the current market environment and the financial performance of the Group in the current year in determining the level of the dividend for the year. Accordingly, the Board has decided not to pay a second interim dividend. The total dividend for the full year amounts to 2.5 pence per share (2009: 12.5 pence per share).

Directorate changes

Chris Edmeades joins the board with immediate effect as Chief Risk Officer. He brings a vast range of relevant experience having joined Liontrust in 2002 as Head of Risk Management. Further information on Chris Edmeades is set out below.

Outlook

We are at a turning point in the fortunes of Liontrust. The changes being implemented and the strong fund management performance lead me to believe the outlook is a much more positive and profitable one.

Adrian Collins

Chairman

15 June 2010

Note -:

Background on Chris Edmeades

Chris Edmeades, aged 47, is responsible for overseeing all risk management, compliance, legal and internal audit functions of the Group. Before joining Liontrust in 2002, Chris was at Deutsche Trustee Company Limited for two years as the Director responsible for trustee and depositary services.  Prior to that, he was at Lloyds TSB Limited where, during a career of 22 years, he worked in the Treasury, Group Risk Management and Securities Services divisions, his last appointment being the Head of Compliance for the Securities Services business.

Current directorships

None.

Other directorships in the previous five years

None.

The Group confirms that there are no further matters to be disclosed pursuant to the requirements of paragraph LR 9.6.13 R of the Listing Rules of the UK Listing Authority.

Extract from the Chief Executive's Business Review

Fund Performance

UK Retail Funds

% returns (Quartile Ranking) to 31 March 2010

	1 year	3 years	Manager tenure	Manager appointed
The Liontrust Economic Advantage
First Growth Fund (IMA UK All Companies)	46.6% (3)	-3.1% (2)	45.9% (3)	25.03.09
First Opportunities Fund (IMA UK All Companies)	57.9% (1)	4.8% (1)	49.2% (1)	11.11.05
Intellectual Capital Trust (IMA UK Smaller Companies)	59.5% (2)	-3.5% (1)	210.0% (1)	08.01.98
The Liontrust Cashflow Solution
First Income Fund (IMA UK Equity Income)	50.0% (1)	-24.5% (4)	50.7% (1)	25.03.09
First Large Cap. Fund (IMA UK All Companies)	38.6% (4)	-6.7% (3)	37.9% (4)	25.03.09
Continental Europe Fund (IMA Europe ex UK)	50.7% (1)	8.4% (1)	21.0% (1)	15.11.06
European Absolute Return Fund (IMA Absolute Return)	n/a	n/a	-7.0% (4)	09.07.09
Index Fund
Top 100 Fund (IMA UK All Companies)	50.8% (3)	0.3% (2)	148.3% (3)	14.07.95

Offshore Funds

% Returns to 31 March 2010

	1 year		3 years	Since  launch	Launch date
The Liontrust Cashflow Solution
Pan-European Fund (Luxembourg SICAV, Euro class)	56.0%		n/a	-25.4%	01.06.07
European Long/Short Fund (Guernsey domiciled hedge fund (Euro NAV)	-1.7%		44.4%	45.8%	06.12.06
The Liontrust Credit Process
Credit Fund (Cayman domiciled hedge fund, Euro NAV)	56.5%		53.8%	146.8%	01.11.00
Credit Absolute Return Fund (Luxembourg SICAV, Euro class)	n/a		n/a	1.9%	17.03.10
The Liontrust Global Equity Process
European Growth Long/Short Fund (Guernsey domiciled hedge fund, Euro NAV)		n/a	n/a	0.7%	01.03.10

It is important to remember that the price of units, and the income from them, can fall as well as rise and are not guaranteed and that past performance is not a guide to the future.

Because of the risks involved, investment in hedge funds and absolute return funds is suitable only for investors who are able to bear the loss of a substantial portion or even all of the money they invest in the funds, who understand the high risks involved, believe that investment in the funds is suitable for them based on their investment objectives and financial needs. Investors are urged to seek independent professional advice on the implications of investing in the funds.

UK RETAIL FUNDS Performance data source: Financial Express, Sterling terms, bid to bid basis, total return.  The issue of units may be subject to an initial charge, which will have an impact on the realisable value of the investment, especially in the short term. The Funds' Prospectus or Simplified Prospectus are available direct from Liontrust or from our website, www.liontrust.co.uk. 

OFFSHORE FUNDS Performance data sources: Liontrust Investment Funds Limited (Luxembourg SICAV), Liontrust Investment Services Limited (Liontrust Credit Fund), Liontrust International (Guernsey) Limited (Liontrust European Long/Short Fund and Liontrust European Growth Long/Short Fund); Euro terms.  Subscriptions must be made only on the basis of a prospectus, which is issued to authorised financial advisers and qualifying persons only.

Sales and marketing

Liontrust distributes funds and segregated accounts to both the institutional and retail markets. Of Liontrust's existing assets under management, 67% come from the retail market while the rest is from institutional investors.

Our strong short, medium and long-term performance across our fund management teams is being communicated to clients and the rest of the market through regular dialogue, client presentations, literature and press coverage. The rebranding we are undertaking, and which is nearly complete, will provide clients with clear and focused information. We are implementing more targeted sales strategies to promote funds in the retail market and increasing Liontrust's engagement with existing and potential clients.

We have expanded and enhanced Liontrust's suite of marketing literature, are developing a new website and will start an advertising campaign later this year. Along with hosting client presentations around the UK and press coverage, these initiatives are designed to raise Liontrust's profile in the retail and institutional markets and build loyalty among fund buyers to the company.

Cost Reduction and Restructuring Programme Update

On 4 February 2010, the Company announced that it had decided to implement a cost reduction and restructuring programme (the "Programme"). The Programme aims to reduce administration costs by approximately £2.5 million per annum. The cost of implementing the Programme is £1.4 million and most of this has been incurred in the year.

Our North American sales and marketing office has been closed down and the reduction in employment and other administration costs have been implemented. The restructuring of the Group's UK operating subsidiaries is in progress and the new arrangements are currently awaiting regulatory approval. The restructure is expected to be completed in Q3 2010.

John Ions

Chief Executive

15 June 2010

Consolidated Statement of Comprehensive Income

for the year ended 31 March 2010 (Unaudited)

					Year	Year
					ended	ended
					31-Mar-10	31-Mar-09
				Notes	£'000	£'000
Continuing operations
Revenue					13,171	36,004
Cost of sales					(102)	(133)
Gross profit					13,069	35,871
Realised gain on sale of financial assets					1,261	143
Administrative expenses				2	(15,346)	(24,240)
Operating (loss)/profit					(1,016)	11,774
Interest receivable					11	599
Interest payable					-	(23)
(Loss)/profit before tax					(1,005)	12,350
Taxation				3	2,094	(3,873)
Profit for the year					1,089	8,477
Other comprehensive income:
Net gains on available-for-sale financial assets net of tax					1,023	670
Amounts recycled through the Statement of Comprehensive Income					(1,261)	(143)
Exchange differences on translating foreign operations					(72)	26
Other Comprehensive income for the year, net of tax					(310)	553
Total comprehensive income					779	9,030
Memo - Dividends					(2,245)	(8,382)
					Pence	Pence
Basic earnings per share				4	3.64	28.32
Diluted earnings per share				4	3.18	28.32

Consolidated Balance Sheet

as at 31 March 2010 (Unaudited)

					31-Mar-10	31-Mar-09
					£'000	£'000
Assets
Non current assets
Intangible assets					800	1,000
Property, plant and equipment					111	156
Deferred tax assets					711	546
					1,622	1,702
Current assets
Trade and other  receivables					14,302	42,893
Financial assets					8,052	6,839
Cash and cash equivalents					11,722	26,637
					34,076	76,369
Non current financial assets held for sale					830	-
Total current assets					34,906	76,369
Liabilities
Current liabilities
Deferred tax liabilities					(160)	(289)
Trade and other payables					(14,644)	(54,712)
Accruals					(113)	(333)
					(14,917)	(55,334)
Liabilities directly linked with non current financial assets held for sale					(181)	-
Total current liabilities					(15,098)	(55,334)
Net current assets					19,808	21,035
Net assets					21,430	22,737
Shareholders' equity attributable to owners of the parent
Ordinary shares					337	337
Share premium					8,962	8,962
Capital redemption reserve					15	15
Revaluation reserve					407	645
Retained earnings					23,881	24,950
Own shares held					(12,172)	(12,172)
Total equity					21,430	22,737

Consolidated Cash Flow Statement

for the year ended 31 March 2010 (Unaudited)

						Year	Year
						ended	ended
						31-Mar-10	31-Mar-09
						£'000	£'000
Cash flows from operating activities
Cash inflow from operations						18,852	41,652
Cash outflow from operations						(20,706)	(26,439)
Cash (outflow)/inflow from changes in unit trust receivables and payables						(6,222)	4,803
Net cash (used in)/generated from operations						(8,076)	20,016
Interest received						11	599
Interest paid						-	(23)
Tax paid						(2,053)	(5,855)
Net cash (used in)/generated from operating activities						(10,118)	14,737
Cash flows from investing activities
Purchase of property and equipment						(23)	(83)
(Purchase)/sale of Seeding investments						(999)	2,398
Purchase of intangible asset						(1,000)	-
Net cash (used in)/generated from investing activities						(2,022)	2,315
Cash flows from financing activities
Purchase of minority interest shares						(508)	-
Borrowings:(Repaid)						-	(2,884)
Dividends paid to shareholders						(2,245)	(8,382)
Net cash used in financing activities						(2,753)	(11,266)
Net (decrease)/increase in cash and cash equivalents						(14,893)	5,786
Effect of exchange rate changes						(22)	42
Opening cash and cash equivalents*						26,637	20,809
Closing cash and cash equivalents						11,722	26,637
* Cash and cash equivalents consist only of cash balances.

Consolidated Statement of Changes in Equity

for the year ended 31 March 2010 (Unaudited)

		Share	Share		Capital		Revaluation		Retained		Own shares	Total
		capital	premium		redemption				earnings		held	Equity
		£ '000	£ '000		£ '000		£ '000		£ '000		£ '000	£ '000
Balance at 1 April 2009 brought forward		337	8,962		15		645		24,950		(12,172)	22,737
Profit for the year		-	-		-		-		1,089		-	1,089
Net gains on available-for-sale financial assets net of tax		-	-		-		1,023		-		-	1,023
Amounts recycled through the Statement of Comprehensive Income		-	-		-		(1,261)		-		-	(1,261)
Gain on foreign exchange		-	-		-		-		(72)		-	(72)
Total comprehensive income for the year		-	-		-		(238)		1,017		-	779
Dividends paid		-	-		-		-		(2,245)		-	(2,245)
Equity share options issued		-	-		-		-		159		-	159
Balance at 31 March 2010		337	8,962		15		407		23,881		(12,172)	21,430
Consolidated Statement of Changes in Equity
for the year ended 31 March 2009
		Share	Share		Capital		Revaluation		Retained		Own shares	Total
		capital	premium		redemption				earnings		held	Equity
		£ '000	£ '000		£ '000		£ '000		£ '000		£ '000	£ '000
Balance at 1 April 2008 brought forward		337	8,962		15		118		25,207		(12,172)	22,467
Profit for the year		-	-		-		-		8,477		-	8,477
Net gains on available-for-sale financial assets net of tax		-	-		-		670		-		-	670
Amounts recycled through the Statement of Comprehensive Income		-	-		-		(143)		-		-	(143)
Gain on foreign exchange		-	-		-		-		26		-	26
Total comprehensive income for the year		-	-		-		527		8,503		-	9,030
Acquisition of minority interest shares		-	-		-		-		(508)		-	(508)
Dividends paid		-	-		-		-		(8,382)		-	(8,382)
Equity share options issued		-	-		-		-		130		-	130
Balance at 31 March 2009		337	8,962		15		645		24,950		(12,172)	22,737

Notes to the Financial Statements (Unaudited)

1.       Accounting policies

The Group's accounting policies are consistent with those set out in the Report and Accounts for the year ended 31 March 2009 with the following exceptions:

In these financial statements, the Group has presented a Consolidated Statement of Comprehensive Income in line with the revised requirements of IAS 1 and has adopted IFRS 7 Financial Instruments: Disclosures and IFRS 8 Operating segments. The directors anticipate the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the Group.

The Group holds some financial assets as "non current financial assets held-for-sale". These financial assets represent seeding investments where the Group controls the asset but meets the requirements under IFRS 5 whereby it is being held on a temporary basis. It is the intention of the Group that within the next 12 months the asset will no longer be under the control of the Group.

2.       Administrative expenses

	Year ended	Year ended
	31-Mar-10	31-Mar-09
	£'000	£'000
Employee related expenses
Director and employee costs	9,591	16,907
Share incentivisation expense	105	253
Severance compensation	126	1,622
Cost reduction and restructuring program related severance compensation	1,021	-
	10,843	18,782
Non employee related expenses
Cost reduction and restructuring program	281	-
Depreciation and Intangible asset amortisation	268	107
Other administration expenses	3,954	5,351
	15,346	24,240

3.       Taxation

On 25 March 2010 there was a reorganisation of the sponsorship of the Liontrust Asset Management Employee Trust (the 'Trust'). As part of this reorganisation Liontrust asset Management PLC became the sponsor in place of Liontrust Management Services Limited. Prior to the transfer an impairment review was carried out under the appropriate accounting standards and the value of the loan to the Trust was calculated at £4,360,000 (the loan value prior to the impairment review was £12,172,600).

The impairment of the value of the loan to the Trust of £7,813,000 has been reflected in the financial statements of the Group's subsidiaries where appropriate and in the corresponding tax calculations within these subsidiaries. The tax adjustment reflects the impairment at 28%.

The impairment has been removed on consolidation from the Group's financial statements.

4.       Earnings per share

The calculation of basic earnings per share is based on profit after taxation for the year and the weighted average number of Ordinary Shares in issue for each period. The weighted average number of Ordinary Shares was 29,937,673 for the year (2009:29,937,673). 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 or Ordinary Shares held in the Liontrust Asset Management Employee Trust that were in existence during the year ended 31 March 2010 and for the effect of buying out the minority shareholders in Liontrust European Investment Services Limited. The adjusted weighted average number of Ordinary Shares so calculated for the year was 34,216,420 (2009: 29,937,673).

5.       Reconciliation to adjusted profit before tax

			Year	Year
			ended	ended
			31-Mar-10	31-Mar-09
			£'000	£'000
(Loss)/profit before tax			(1,005)	12,350
Share incentivisation expense			105	253
Severance compensation			126	1,622
Cost reduction and restructuring programme related severance compensation			1,021	-
Cost reduction and restructuring programme related non employee expense			281	-
Depreciation and Intangible asset amortisation			268	107
Adjusted profit before tax			796	14,332

Other information

This preliminary announcement constitutes non-statutory accounts under section 435 of the Companies Act 2006. The financial information for the year ended 31 March 2009 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 498(2) or (3) of the Companies Act, 2006.

The Annual Report is expected to be posted to shareholders on or around 30 June 2010.

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 Group. 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. As a result, the Group's actual future financial condition, results of operations and business and plans may differ materially from the plans, goals and expectations expressed or implied by these forward-looking statements.  Liontrust undertakes no obligation publicly to update or revise forward-looking statements, except as may be required by applicable law and regulation (including the Listing Rules of the Financial Services Authority).  Nothing in this announcement should be construed as a profit forecast or be relied upon as a guide to future performance.

END

 

END

 

 

FR SFLFWIFSSELM