Final Results

RNS Number : 6394T

Liontrust Asset Management PLC

10 June 2009

 



Embargoed until 0700 hours, Wednesday 10 June 2009

LIONTRUST ASSET MANAGEMENT PLC

PRELIMINARY RESULTS FOR THE YEAR ENDED

31 MARCH 2009

Liontrust Asset Management PLC ('Liontrust' or 'the Group'), the independent specialist fund management group, today announces its results for the year ended 31 March 2009.

The last financial year was arguably the most difficult that Liontrust has ever faced. It is disappointing when colleagues depart and this came against a backdrop of some of the worst stock market conditions any of us have seen. It should be of no surprise that Liontrust has seen a fall in assets under management and profits in the year to 31 March 2009. 

The current financial year will be challenging. Liontrust enters the year with lower assets under management and against a backdrop of extremely volatile stock markets. The Group will be more dependent on performance fees and sales for revenue increases than has historically been the case. 

Liontrust, however, has implemented a number of measures to grow the Group in the light of these developments. The Group reacted promptly to Mr Lang's and Mr Pattisson's resignations in January 2009 and by March 2009 Liontrust was able to announce the succession plan for their funds and mandates. The gaps have been amply filled through internal fund managers who are more than up to the task. 

Liontrust also acquired a new fixed income team from Ilex Asset Management in March 2009. A Group objective that Liontrust has outlined to shareholders for some time has been to diversify further the product range across existing and new asset classes. Recent developments have stimulated significant interest from fund managers wanting to join Liontrust and the Group is engaged in discussions to achieve greater diversification for shareholders.

A number of fund launches are planned for 2009. These include a retail version of the successful Liontrust European Long/Short fund and fixed income funds. These fund launches are good opportunities for the Group. Absolute return funds are attracting a lot of interest from retail investors while the fixed income sector has been the biggest selling sector among retail investors for the past few months. 

Liontrust is also enjoying healthy expressions of interest from prospective clients in the Group's two existing hedge funds. These funds generate higher levels of management fees than were received on those pension fund and unit trust assets that have been withdrawn over recent months. 

Liontrust is continuing to expand its sales and marketing teams to support the sale of products, with Ian Lewis joining as Head of Institutional Clients in September 2009. 

Liontrust is in a strong financial position. The group has no debt and held net cash (Cash plus Receivables less Payables) and financial assets of £21.7 million as at 31 March 2009. This will be a key factor in the Group prospering in the current environment.

Results:

• Profits before tax decreased by 25% to £12.4 million (2008: £16.5 million)

• Basic earnings per share decreased by 24% to 28.3p (2008: 37.0p)

• Performance fees increased by 10% to £16.2 million (2008: £14.8 million)

• FTSE All-Share down 32% in the year

Funds under management:

• On 31 March 2009, funds under management were £1.9 billion (2008: £4.7 billion) 

• On 9 June 2009, funds under management were £1.2 billion 

Dividend:

• A second interim dividend of 5.0 pence per share

• The total dividend for the full year amounts to 7.5 pence per share (2008: 12.5 pence)

• As announced in November 2008, the Board has ceased payments of special dividends from performance fee revenues

Directorate changes:

• Bernard Asher will retire as Chairman at a date to be confirmed

• Adrian Collins joins with immediate effect as non-executive director and deputy chairman and will become Chairman on Bernard Asher's retirement in due course

Commenting on the results, Nigel Legge, Chief Executive, said:

'These results should be seen in the context of a very difficult stock market and economic environment. The resignations of Jeremy Lang and William Pattisson have also impacted on our assets under management and therefore revenues and profits.

'We are now well placed to grow the business, however. The succession plan for Jeremy and William was implemented within a couple of months. We were also able to announce our expansion into fixed income in March and intend to follow this with entry into other new asset classes in due course. 

'The launch of new absolute return equity and fixed income funds this year will help us to increase our assets under management. This will be aided by the continued expansion of our sales and marketing team with the recruitment of Ian Lewis as Head of Institutional Clients in September 2009. 

'We are delighted that Adrian Collins has joined Liontrust as deputy chairman and on Bernard's retirement will take over as Chairman. His experience and contacts in the fund management sector will be invaluable to us as we look to take the Group forward in accordance with our stated strategy.'

For further information please contact:

Liontrust Asset Management                    020 7412 1700 

Nigel Legge                                                          www.liontrust.co.uk

Vinay Abrol 

Simon Hildrey

Altium                                                   020 7484 4040 

Ben Thorne

Sam Fuller 

  Chairman's Statement

Introduction

This has been a difficult year for Liontrust, with the fall in stock markets, departure of two fund managers and fund losses. It took just over two months, however, to implement our succession plan and in March 2009 we also added the highly rated fixed income fund management team from Ilex Asset Management. Liontrust is in a strong financial position with net cash and financial assets of £21.7 million and no debt at 31 March 2009.

Future strategy

For the past five years, the Board has been pursuing a clear strategy to develop Liontrust by diversifying its fund management capabilities away from its concentration on UK equities. The success of this strategy has been demonstrated by the performance of Gary West and James Inglis-Jones, who joined Liontrust in 2006, and the recruitment of the fixed income team from Ilex Asset Management in March 2009. Liontrust continues to have discussions with potential new fund management teams who fit Liontrust's strong process oriented approach to asset management. We will look to strengthen existing fund management teams so they can, if appropriate, implement existing successful investment processes in other markets. We will also further strengthen our sales and marketing teams to continue to broaden our client base both in the UK and overseas and raise the Group's profile with professional investors.

Directorate changes

Adrian Collins joins as non-executive director and deputy chairman with immediate effect and I will be retiring as non-executive Chairman in due course. It is intended that Adrian Collins will succeed me as non-executive Chairman. He brings a vast range of relevant experience to the Board and I wish him every success for the future. 

Sales and marketing

Ian Lewis is to join as Head of Institutional Clients on 1 September 2009. He will be responsible for building Liontrust's institutional client business through providing investment services to pension funds, charities, insurance companies, hedge fund of funds and other institutional clients. 

Liontrust's people

We attach great importance to continuity and loyalty of all our staff. The employees at Liontrust have done an excellent job during this exceptionally difficult year and I would like to thank them for their efforts.

Appropriate incentives, an energetic, challenging and dynamic working environment and a bright future for the Group will all play their part in keeping the team together and motivated. Employees own 6% of Liontrust's shares and a further 7% through share options. 

Results

Profit before tax in the year to 31 March 2009 is £12.350 million, compared with £16.501 million a year ago.

Dividend

The Board has considered prospects for profits in future years, the current market environment and the future strategy of the Group in determining the level of the dividend for the year. Accordingly, the Board has declared a second interim dividend of 5.0 pence per share, payable on 22 July 2009 to shareholders who are on the register as at 26 June 2009, the shares going ex-dividend on 24 June 2009. The total dividend for the full year, with the 2.5 pence per share interim dividend already paid, amounts to 7.5 pence per share. This compares with a final dividend of 12.5 pence per share for the previous period. In November 2008, we announced that the Board had decided to cease the payment of special dividends from performance fee revenues.

Funds under management and sales

On 31 March 2008, funds under management were £4.707 billion. Average funds under management for the year to 31 March 2009 were £3.972 billion, 24% lower than the average for last year. Gross sales of our unit trusts and offshore funds totalled a healthy £392 million over the year; net redemptions were £306 million in the year. Institutional assets amounting to £1,070 million were withdrawn in the same period.

A reconciliation of fund flows and funds under management ('FuM') over the period follows:-

Fund Flow Analysis	Total	Institutional	Retail & Offshore
Opening FuM - 1 April 2008	4,707	2,988	1,719
Inflows	738	346	392
Outflows	(2,114)	(1,416)	(698)
Net flows	(1,376)	(1,070)	(306)
Market movement	(1,443)	(849)	(594)
Closing FuM - 31 March 2009	1,888	1,069	819

On 31 March 2009, funds under management were £1.888 billion. As at 9 June 2009, funds under management stood at £1.201 billion and were broken down by type and process as follows:-

Process	Fund Manager	Total	Institutional	Retail & Offshore
Cashflow Solution	West / Inglis-Jones	843	302	541
The Economic Advantage	Cross / Fosh	238	0	238
Fixed Income	Thorp/Sclater	32	0	32
Indexed		46	0	46
Legacy UK Growth/Large Cap	West / Inglis-Jones	42	42	0
Total		1,201	344	857

We believe £1.2 billion in assets under management is a stable base from which we can now grow the business.

Fund Performance

The unit trusts based on our Economic Advantage investment process outperformed their relevant benchmarks in the year to 31 March 2009. Liontrust Intellectual Capital Trust was 17.8% ahead of its benchmark over the year to 31 March 2009. From launch on 8 January 1998 to 31 March 2009, the Fund outperformed the FTSE Small Cap (ex IT) index by 109.9%.

The Liontrust First Opportunities Fund was 4.9% ahead of the FTSE All-Share benchmark over the year to 31 March 2009 and 13.0% ahead from launch on 10 November 2005.

Anthony Cross, co-manager of the Liontrust Intellectual Capital Trust and Liontrust First Opportunities Fund, was named the best performing UK All Companies manager for his risk adjusted returns over three years in Citywire's annual Britain's Top 100 Fund Manager survey earlier this year. 

The Liontrust European Long/Short Fund, which applies the Cashflow Solution investment process, has also continued its strong performance. Over the year to 31 March 2009, the euro share class of the Fund returned 14.10% and 50.34% from launch in December 2006 to the end of May 2009. The Continental Europe Fund performed in line with its index over the year and from launch on 15 November 2006 to the end of May 2009 returned (5.22)% compared to (13.72)% by the FTSE All World Developed Europe ex UK index and (16.58)% by the average fund in the Europe Excluding UK sector. The Group believes the process can be successfully applied to the Liontrust First Income Fund and the managers expect to be able to maintain the dividend distribution of the Fund this year.

The Liontrust Credit Fund, which is managed by the fixed income team recruited from Ilex in March, has a strong short and long-term performance record. From the start of 2009 to the end of May 2009, the euro share class of the Fund was up 7.48%, having returned 5.01% in April and 4.45% in May, while from launch in June 2000 to the end of May the Fund returned 56.07%. 

The Liontrust First Growth Fund and Liontrust First Large Cap Fund underperformed their benchmarks over the year to 31 March 2009.  

We are confident that, over the coming year, investors will appreciate the strong overall performance across our range of funds. Specific performance statistics are widely available from many sources, including our website, www.liontrust.co.uk.

Executive remuneration

The Group intends to put in place a deferred bonus scheme for the executive directors and will announce details of the proposed arrangements when it announces its interim results in November 2009. In advance of this, Nigel Legge (Chief Executive) and Vinay Abrol (Chief Financial Officer & Chief Operating Officer) have indicated to the Board that they currently intend to purchase shares in Liontrust out of and to the value of the net proceeds of their cash bonus (after tax and national insurance) for the year ended 31 March 2009. Any such purchases (if made) would be subject to their ability to do so under applicable law and regulation and will not, in any event, be made prior to the posting date of the Annual Report 2009, although Nigel Legge and Vinay Abrol have each indicated to the Board that they currently intend to make such purchases prior to the end of this calendar year.

Outlook

We are well prepared for the challenges ahead. We start the year with substantially lower funds under management, with the market at a much lower level than the average for last year, and this will, inevitably, affect our profitability in the new financial year. However, we have good performance across our funds and have made changes to the management of the funds and have recruited a strong fixed income team. We have a talented group of professionals who have worked together for a long time and we are delighted with the new additions we have made to the team. The stable partnership culture and strong sense of goodwill that we have built across a wide spectrum of clients will remain key to our future success.

Bernard Asher

Chairman

9 June 2009

Note -:

Background on Adrian Collins

Adrian Collins, aged 55, has worked in the fund management business for over 30 years, a large part of which was at Gartmore Investment Management Limited where, latterly, he was managing director. He is a consultant to Strand Partners Limited, a corporate finance business based in the West End of London.

Current directorships

City Natural Resources High Yield Trust PLC, Deutsche Land PLC (1), LIT PLC (1), LTC Holdings PLC, Midas Capital PLC and New City High Yield Fund Limited (2).

Other directorships in the previous five years

Avanti Capital PLC, Bluewater Bio Limited, Corvus Capital Inc. (3), The Laxey Investment Trust PLC, New City High Yield Trust PLC, Raven Russia Limited (4) and Windsor PLC.

All of the above companies are incorporated in England and Wales with the exception of those numbered as follows: (1) Isle of Man, (2) Jersey, (3) British Virgin Islands, and (4) Guernsey.

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. 

Consolidated Income Statement

for the year ended 31 March 2009 (Unaudited)

					Year	Year
					Ended	ended
					31-Mar-09	31-Mar-08
				Notes	£'000	£'000
Continuing operations
Revenue					36,004	40,997
Cost of sales					(133)	(155)
Gross profit					35,871	40,842
Realised gain on sale of investments					143	-
Administrative expenses				2	(24,240)	(25,401)
Operating profit					11,774	15,441
Interest receivable					599	1,114
Interest payable					(23)	(54)
Profit before tax					12,350	16,501
Taxation					(3,873)	(5,428)
Profit for the period					8,477	11,073
Memo - Dividends paid					(8,382)	(4,538)
					Pence	Pence
Basic earnings per share				3	28.32	37.04
Diluted earnings per share				3	28.32	35.94

  Consolidated Balance Sheet

as at 31 March 2009 (Unaudited) 

					31-Mar-09	31-Mar-08
					£'000	£'000
Assets
Non current assets
Intangible assets					1,000	-
Property, plant and equipment					156	180
Deferred tax assets					546	650
					1,702	830
Current assets
Receivables					42,893	47,792
Financial assets					6,839	8,445
Cash and cash equivalents					26,637	20,809
					76,369	77,046
Liabilities
Current liabilities
Borrowings					-	(2,885)
Deferred tax liabilities					(289)	-
Payables					(54,712)	(52,049)
Accruals					(333)	(475)
					(55,334)	(55,409)
Net current assets					21,035	21,637
Net assets					22,737	22,467
Shareholders' equity
Ordinary shares					337	337
Share premium					8,962	8,962
Capital redemption reserve					15	15
Revaluation reserve					645	118
Retained earnings					24,950	25,207
Own shares held					(12,172)	(12,172)
Total equity					22,737	22,467

  Consolidated Cash Flow Statement

for the year ended 31 March 2009 (Unaudited)

						Year		Year
						Ended		Ended
						31-Mar-09		31-Mar-08
						£'000		£'000
Cash flows from operating activities
Cash inflow from operations						41,652		35,026
Cash outflow from operations						(26,439)		(21,678)
Cash inflow/(outflow) from changes in unit trust receivables and payables						4,803		(2,041)
Net cash from operations						20,016		11,307
Interest received						599		1,114
Interest paid						(23)		(54)
Tax paid						(5,855)		(4,586)
Net cash from operating activities						14,737		7,781
Cash flows from investing activities
Purchase of property and equipment						(83)		(125)
Sale/(purchase) of seeding investments						2,398		(7,610)
Net cash from/(used in) investing activities						2,315		(7,735)
Cash flows from financing activities
Net proceeds from issue of new shares						-		55
Net cost of the cancellation of shares						-		(94)
Sale of own shares						-		314
Borrowings (repaid)/borrowed						(2,884)		2,589
Dividends paid to shareholders						(8,382)		(4,538)
Net cash used in financing activities						(11,266)		(1,674)
Net increase/(decrease) in cash and cash equivalents						5,786		(1,628)
Effect of exchange rate changes						42		-
Opening cash and cash equivalents*						20,809		22,437
Closing cash and cash equivalents						26,637		20,809
* Cash and cash equivalents consist only of cash balances.

  Notes to the Financial Statements (Unaudited)

1.    Accounting policies

The accounting policies are consistent with those set out in the Report and Accounts for the year ended 31 March 2008.

2.    Administrative expenses

	Year ended	Year ended
	31-Mar-09	31-Mar-08
	£'000	£'000
Staff costs
- Director and employee costs	16,907	20,217
- Severance compensation	1,622	-
- Share option expense	130	592
- Share incentive plan expense	106	124
- Share option NI liability	17	72
	18,782	21,005
Other administration expenses	5,458	4,396
	24,240	25,401

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 29,937,673 for the year (29,895,377 for the year ended 31 March 2008). 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 during the year ended 31 March 2009. The adjusted weighted average number of Ordinary Shares so calculated for the year was 29,937,673 (2008: 30,809,065).

4.     Dividends

The directors have declared a second interim dividend of 5.0 pence per share, which will be paid on 22 July 2009 to all shareholders on the register as at 26 June 2009. The shares will go ex-dividend on 24 June 2009.    

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 2008 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 expected to be posted to shareholders on or around 29 June 2009.

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.

 

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