Half Yearly Report

RNS Number : 8483S

Liontrust Asset Management PLC

13 November 2013

 



Embargoed until 0700 hours, Wednesday 13 November 2013

LIONTRUST ASSET MANAGEMENT PLC

HALF YEARLY REPORT FOR THE SIX MONTHS ENDED

30 SEPTEMBER 2013

Liontrust Asset Management Plc ("Liontrust", the "Company", or the "Group"), the independent fund management group, today announces its Half Yearly Report for the six months ended 30 September 2013.

Results:

·     Revenues up 66% compared to the same period last year

·     Adjusted profit before tax of £3.8 million (2012: £0.9 million), an increase of 326%

·     Adjusted diluted EPS of 6.9p per share (2012: 1.9 pence per share), an increase of 256%

·     Profit before tax of £1.7 million (2012: loss before tax of £4.0 million)

Dividend:

·     Interim dividend of 1.0 pence per share payable on 20 December 2013 (2012: nil pence per share)

Assets under management:

·     On 30 September 2013, assets under management were £3.4 billion (2012: £2.4 billion)

·     Close of business on 11 November 2013, assets under management were £3.6 billion*

Fund flows:

·     Net inflows for the six months to 30 September 2013 of £315 million (2012: £189 million)

Acquisition of North Investment Partners Limited:

·     The acquisition of North Investment Partners Limited was announced and completed on 15 October 2013, North's assets under management on completion were £123 million

* Includes assets under management related to the acquisition of North Investment Partners Limited, which completed on 15 October 2013.

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

"The first half of the current financial year clearly demonstrates the significant improvement made by the Group over the last three years. Adjusted profit before tax of £3.8 million is up four times on the corresponding period last year and greater than the total for the financal year ended 31 March 2013.

"This positive momentum, while pleasing, only works if we continue to take strides forward. There is much change within the asset management industry and I believe this will provide clear opportunities for companies that remain focused on and are able to deliver their core strengths. Our long-term fund performance clearly demonstrates our ability to do this over market cycles.

"Our recent acquisition of North Investment Partners highlights this, broadening our distribution base and giving us a first class proposition for clients in the multi-asset and managed solutions space.

"Our successful objective of positioning ourselves as a significant provider of Income solutions was further evidenced through our recent Roadshow when three of our fund management teams presented to nearly 200 intermediaries.

"Income generation has never been more important and will continue to be a major investment theme going forward. Liontrust Macro Equity Income Fund reached its 10 year anniversary on 31 October 2013 as the 4^th best performing fund in the IMA UK Equity Income sector over this period. This is a fantastic achievement by the team and reiterates our decision to acquire them."

For further information please contact:

Liontrust Asset Management                                                     020 7412 1700

John Ions                                                                                             www.liontrust.co.uk

Vinay Abrol

Simon Hildrey - Head of Marketing & Communications

Numis Securities Limited                                                             020 7260 1000

Charles Farquhar, Andrew Holloway

Chairman's Statement

Introduction

I am delighted to announce a very good set of results. Our adjusted profit before tax has increased by 326% over the same period last year and has exceeded the adjusted profit before tax for the last financial year. Revenues are up 66% and we will be able to pay a dividend of 1.0 pence per share on 20 December. This reflects the impressive growth of Liontrust over the past three years and the financial strength of the business.

Our assets under management have continued to grow, with net inflows of £315 million in the first six months of the year. This reflects the strong long-term performance across our fund range, our higher profile and the greater distribution capability we have built over the past three years.

We have further expanded our fund management capability and broadened our distribution base through the acquisition of North Investment Partners in October, providing us with greater access to the wider adviser market.

The growth in demand for multi-asset portfolios and managed solutions will only increase among a significant part of the adviser market in the post-Retail Distribution Review (RDR) environment as greater numbers decide they do not want to manage investment portfolios themselves for part or for all their client base. We will now be able to offer these advisers access to a cost-effective bespoke portfolio management service.

Results

Adjusted profit before tax was £3.842 million (2012: £0.902 million) an increase of 326%, see note 5 below for a reconciliation of adjusted profit before tax.      

Adjusted basic earnings per share of 8.10 pence (2012: 1.95 pence per share) an increase of 315% and Adjusted diluted earnings per share of 6.88 pence per share (2012: 1.93 pence per share) an increase of 256%.

Profit before tax of £1.734 million (2012: Loss before tax of £3.952 million) includes a loss of £2.108 million (2012: £4.854 million) of Adjustments.

Dividend

In accordance with the Company's dividend policy, the Board is declaring an interim dividend of 1.0 pence per share (2012: nil), which will be payable on 20 December 2013 to shareholders who are on the register as at 22 November 2013, the shares going ex-dividend on 20 November 2013.

AuM

Assets under management ("AuM") as at close of business on 30 September 2013 stood at £3,374 million, an increase of 11% since 31 March 2013.

AuM as at close of business on 30 September 2013 were broken down by type and process as follows:-

Process	Total	Institutional	Retail	Offshore Funds
	£m	£m	£m	£m
Cashflow Solution	796	422	370	4
Economic Advantage	1,631	-	1,622	9
Macro Thematic	479	81	398	-
Asia	17	-	17	-
Global Credit	396	-	-	396
Indexed	55	-	55	-
Total	3,374	503	2,462	409

AuM as at close of business on 11 November 2013 were £3,617 million.

Fund Flows

Net inflows of £315 million were achieved for the six months ended 30 September 2013 (2012: £189 million).

A reconciliation of fund flows and AuM over the six month period to 30 September 2013 is as follows:-

	Total	Institutional	UK Retail	Offshore Funds
	£m	£m	£m	£m
Opening AuM - 1 April 2013	3,039	501	2,263	275
Net flows	315	(13)	148	180
Market movement	20	15	51	(46)
Closing AuM - 30 September 2013	3,374	503	2,462	409

Fund Performance (Quartile ranking)

The strength of Liontrust's fund management capability is shown by the fact that all bar one of Liontrust's actively managed unit trust funds are in the first quartile of their respective IMA sector since launch or since the fund managers were appointed to 31 October 2013. 

	Quartile ranking - 1 year	Quartile ranking - 3 year	Quartile ranking - 5 year	Quartile ranking - Since Manager tenure	Launch / Manager appointed
Liontrust UK Growth Fund	4	2	2	1	25/03/2009
Liontrust Special Situations Fund	4	1	1	1	10/11/2005
Liontrust UK Smaller Companies Fund	4	2	2	1	08/01/1998
Liontrust European Absolute Return Fund	4	4	-	4	08/07/2009
Liontrust European Growth Fund	4	4	1	1	15/11/2006
Liontrust Income Fund*	-	-	-	-	03/07/2013
Liontrust Asia Income Fund	1	-	-	1	05/03/2013
Liontrust Macro Equity Income Fund	2	3	1	1	31/10/2003
Liontrust Macro UK Growth Fund	2	3	2	1	01/08/2002

Source: Financial Express, total return, bid to bid, to 31 October 2013 unless otherwise stated.  The above funds are all UK authorised unit trusts (retail share class).  Liontrust FTSE 100 Tracker Fund (index fund) not included. Past performance is not a guide to the future; the value of investments and the income from them can fall as well as rise. Investors may not get back the amount originally subscribed.

*Liontrust Income Fund quartile ranking not included as from 3 July 2013, the fund's investment objective and policy changed to allow the fund managers to select companies on a global basis. The fund moved into the IMA Global Equity Income sector on 1 August.

Acquisition of North Investment Partners Limited

On 15 October 2013, Liontrust announced that it had entered into a conditional share purchase agreement with the existing shareholders ("North Shareholders") of North Investment Partners Limited ("North") to purchase (the "Acquisition") the entire issued ordinary share capital of North from North Shareholders. The Acquisition completed on 15 October 2013 and North's AuM on completion was £123 million.

We are confident we can grow the team's AuM given the experience and ability of John Husselbee and Paul Kim in managing multi-asset portfolios, the focus of the business on providing advisers with access to cost-effective bespoke portfolio management and our own stronger brand and greater marketing and sales resources.

Outlook

We have established a very strong base from which to maintain the growth momentum we have built up over the past three years. We have six excellent fund management teams, a broadening distribution capability and the Group is much stronger financially.

Adrian Collins

Chairman

Consolidated Statement of Comprehensive Income

Six months ended 30 September 2013

			Six	Six	Year
			months to	months to	ended
			30-Sep-13	30-Sep-12	31-Mar-13
			(unaudited)	(unaudited)	(audited)
		Notes	£'000	£'000	£'000
Continuing Operations
Revenue		3	13,616	8,227	20,446
Cost of sales			(48)	(53)	(105)
Gross profit			13,568	8,174	20,341
Realised loss on sale of financial assets			-	(8)	(6)
Administration expenses		4	(11,761)	(12,009)	(24,051)
Operating profit/(loss) from Continuing Operations			1,807	(3,843)	(3,716)
Interest receivable			7	4	9
Interest payable			(80)	(113)	(228)
Profit/(loss) before tax from Continuing Operations			1,734	(3,952)	(3,935)
Taxation		6	(529)	274	(19)
Profit/(loss) for the period			1,205	(3,678)	(3,954)
Other comprehensive income:
Net losses on available-for-sale financial assets net of tax			-	-	(6)
Amounts recycled through the Consolidated Statement of Comprehensive Income			-	-	6
Other Comprehensive income for the period, net of tax			-	-	-
Total comprehensive income			1,205	(3,678)	(3,954)
			Pence	Pence	Pence
Basic earnings per share		7	3.30	(10.46)	(11.20)
Diluted earnings per share		7	2.84	(10.37)	(10.04)
The notes 1 to 14 form an integral part of this condensed consolidated interim financial information.

Consolidated Balance Sheet

As at 30 September 2013

			30-Sep-13	30-Sep-12	31-Mar-13
			(unaudited)	(unaudited)	(audited)
		Notes	£'000	£'000	£'000
Assets
Non current assets
Intangible assets		9	8,723	12,002	10,098
Property, plant and equipment			248	113	184
Deferred tax assets			1,426	1,912	1,757
Total Non current assets			10,397	14,027	12,039
Current assets
Trade and other receivables			22,219	15,394	31,123
Financial assets		10	479	111	131
Cash and cash equivalents			10,444	6,034	10,483
Total current assets			33,142	21,539	41,737
Liabilities
Non current liabilities
Convertible unsecured loan stock - Loan component		11	-	(3,521)	(2,621)
Total Non current liabilities			-	(3,521)	(2,621)
Current liabilities
Trade and other payables			(23,621)	(15,855)	(33,994)
Total current liabilities			(23,621)	(15,855)	(33,994)
Net current assets			9,521	5,684	7,743
Net assets			19,918	16,190	17,161
Shareholders' equity
Ordinary shares			424	389	398
Share premium			17,692	13,801	14,692
Capital redemption reserve			19	15	15
Convertible unsecured loan stock - Equity component		11	-	479	479
Retained earnings			14,010	13,678	13,779
Own shares held			(12,227)	(12,172)	(12,202)
Total equity			19,918	16,190	17,161

The notes 1 to 14 form an integral part of this condensed consolidated interim financial information.

Consolidated Cash Flow Statement

Six months ended 30 September 2013

				Six	Six	Year
				months to	months to	ended
				30-Sep-13	30-Sep-12	31-Mar-13
				(unaudited)	(unaudited)	(audited)
				£'000	£'000	£'000
Cash flows from operating activities
Cash inflow from operations				20,216	11,599	27,782
Cash outflow from operations				(19,237)	(12,626)	(26,592)
Cash inflow from changes in unit trust receivables and payables				674	679	3,153
Net cash from/(used in) operations				1,653	(348)	4,343
Interest received				3	4	9
Tax paid				(94)	-	-
Net cash from/(used in) operating activities				1,562	(344)	4,352
Cash flows from investing activities
Purchase of property and equipment				(78)	(9)	(97)
Acquisitions				-	(12,240)	(12,240)
Sale of seeding investments				50	161	308
Purchase of seeding investments				(42)	(97)	(267)
Net cash used in investing activities				(70)	(12,185)	(12,296)
Cash flows from financing activities
Issue of new shares				3,030	2,288	3,167
Purchase of own shares				(1,019)	-	-
Issue of Convertible unsecured loan stock				-	4,000	4,000
Conversion of unsecured loan stock				(3,030)		(900)
Repayment of convertible unsecured loan stock				(70)	-	-
Interest on unsecured loan stock				(80)	(113)	(228)
Dividends paid				(362)	-	-
Net cash (used in)/from financing activities				(1,531)	6,175	6,039
Net decrease in cash and cash equivalents				(39)	(6,354)	(1,905)
Opening cash and cash equivalents*				10,483	12,388	12,388
Closing cash and cash equivalents				10,444	6,034	10,483

* Cash and cash equivalents consists only of cash balances.

Consolidated Statement of Change in Equity

Six months ended 30 September 2013

		Share	Share	Capital	Convertible	Retained	Own shares	Total
		capital	premium	redemption	Loan Equity	earnings	held	Equity
					Element
		£ '000	£ '000	£ '000	£ '000	£ '000	£ '000	£ '000
Balance at 1 April 2013 brought forward		398	14,692	15	479	13,779	(12,202)	17,161
Profit for the period		-	-	-	-	1,205	-	1,205
Dividends paid		-	-	-	-	(362)	-	(362)
Total comprehensive income for the period		-	-	-	-	843	-	843
Addition of Convertible unsecured loan stock -  Equity component		-	-	-	(479)	-	-	(479)
Shares issued		26	3,000	4	-	-	-	3,030
Purchase of own shares		-	-	-	-	(994)	(25)	(1,019)
Equity share options issued		-	-	-	-	382	-	382
Balance at 30 September 2013		424	17,692	19	-	14,010	(12,227)	19,918

Consolidated Statement of Change in Equity

Six months ended 30 September 2012

		Share	Share	Capital	Re-	Convertible	Retained	Own shares	Total
		capital	premium	redemption	valuation	Loan Equity	earnings	held	Equity
						Element
		£ '000	£ '000	£ '000	£ '000	£ '000	£ '000	£ '000	£ '000
Balance at 1 April 2012 brought forward		371	11,552	15	-	-	17,073	(12,172)	16,839
Loss for the period		-	-	-	-	-	(3,678)	-	(3,678)
Net loss on available-for-sale financial assets net of tax		-	-	-	(8)	-	-	-	(8)
Amounts recycled through the Consolidated Statement of Comprehensive Income		-	-	-	8	-	-	-	8
Total comprehensive income for the period		-	-	-	-	-	(3,678)	-	(3,678)
Addition of Convertible unsecured loan stock -  Equity component		-	-	-	-	479	-	-	479
Shares issued		18	2,249	-	-	-	-	-	2,267
Equity share options issued		-	-	-	-	-	283	-	283
Balance at 30 Sep 2012		389	13,801	15	-	479	13,678	(12,172)	16,190

Consolidated Statement of Change in Equity

Year ended 31 March 2013

		Share	Share	Capital	Convertible	Retained	Own shares	Total
		capital	premium	redemption	Loan Equity	earnings	held	Equity
					Element
		£ '000	£ '000	£ '000	£ '000	£ '000	£ '000	£ '000
Balance at 1 April 2012 brought forward		371	11,552	15	-	17,073	(12,172)	16,839
Loss for the period		-	-	-	-	(3,954)	-	(3,954)
Total comprehensive income for the period		-	-	-	-	(3,954)	-	(3,954)
Addition of Convertible unsecured loan stock -  Equity component		-	-	-	479	-	-	479
Shares issued		27	3,140	-	-	-	-	3,167
Purchase of own shares		-	-	-	-	-	(30)	(30)
Equity share options issued		-	-	-	-	660	-	660
Balance at 31 March 2013		398	14,692	15	479	13,779	(12,202)	17,161

Notes to the Financial Statements

1.    Principal accounting policies

Basis of Preparation

This Half Yearly Report is unaudited and does not constitute statutory accounts within the meaning of s434 of the Companies Act 2006. The financial information for the half years ended 30 September 2013 and 2012 has not been audited or reviewed by the auditors pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information. The statutory accounts for the year ended 31 March 2013, which were prepared in accordance with International Financial Reporting Standards ("IFRS"), comprising standards and interpretations approved by either the International Accounting Standards Board or the International Financial Reporting Interpretations Committee or their predecessors, as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, have been delivered to the Registrar of Companies. The auditors' opinion on these accounts was unqualified and did not contain a statement made under s498 of the Companies Act 2006.                                            

The financial statements have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority ("DTR") and with IAS 34 'Interim Financial Reporting'.                                            

The accounting policies applied in this Half Yearly Report are consistent with those applied in the Group's most recent annual accounts.                                             

At the date of authorisation of these financial statements, the following Standards and Interpretations were in issue but either not endorsed or not yet effective:                                            

IFRS 9                                    Financial instruments: Classification     

IAS 1 (Revised)                 Presentation of Other Comprehensive Income

IFRS10                                   Consolidated Financial Statements

IAS 27 (Revised)               Separate Financial Statements

IFRS 13                                  Fair Value Measurement

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.                                                           

2.    Segmental reporting

The Group's operates only in one business segment - Investment management.                                            

The Group offers different fund products through different distribution channels. All financial, business and strategic decisions are made centrally by the Board, which determines the key performance indicators of the Group. The Group reviews financial information presented at a Group level. The Board, is therefore, the chief operating decision-maker for the Group. The information used to allocate resources and assess performance is reviewed for the Group as a whole. On this basis, the Group considers itself to be a single-segment investment management business.                                           

3.    Revenue from Continuing Operations

	Six	Six	Year
	months to	months to	ended
	30-Sep-13	30-Sep-12	31-Mar-13
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Revenue
- Revenue	13,616	8,207	19,143
- Performance fee revenue	-	20	1,303
Total Revenue	13,616	8,227	20,446

4.    Administration expenses from Continuing Operations

	Six	Six	Year
	months to	months to	ended
	30-Sep-13	30-Sep-12	31-Mar-13
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Employee related expenses
Director and employee costs	1,000	1,089	1,860
Pension costs	62	-	27
Share incentivisation expense	251	176	394
Severance compensation	136	154	191
	1,449	1,419	2,472
Non employee related expenses
Members' drawings charged as an expense	5,516	4,173	10,127
Restructuring (member related)	-	387	572
Restructuring (acquisition related and other)	100	395	598
Acquisition related expenses	-	1,738	1,738
Members' share incentivisation expense	217	117	328
Depreciation, Intangible asset amortisation and impairment	1,404	1,356	3,276
Financial Services Compensation Scheme Levy	-	-	73
Other administration expenses	3,075	2,424	4,867
Total administration expenses	11,761	12,009	24,051

5.    Adjusted profit (or loss) before tax

Adjusted profit before tax is disclosed in order to give shareholders an indication of the profitability of the Group. Adjusted profit or loss is the total Group profit or loss excluding non-cash (depreciation, intangible asset amortisation and IFRS2 related expenses) expenses and non-recurring (cost reduction expenses, restructuring costs (member, acquisition related and other), acquisition related costs, disposal gains, integration costs, share incentivisation expenses, severance compensation and Financial Services Compensation Scheme Interim Levy) expenses ("Adjustments"), and is reconciled in the table below:

	Six	Six	Year
	months to	months to	ended
	30-Sep-13	30-Sep-12	31-Mar-13
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Profit/(loss) for the period	1,205	(3,678)	(3,954)
Taxation on Continuing Operations	529	(274)	19
Profit/(loss) before tax from Continuing Operations	1,734	(3,952)	(3,935)
Employee related share incentivisation expense	251	176	394
Member related share incentivisation expense	217	117	328
Severance compensation	136	541	191
Restructuring (member related)	-	-	572
Restructuring (acquisition related and other)	100	395	598
Acquisition related costs	-	1,738	1,738
Financial Services Compensation Scheme Levy	-	-	73
Members' advance drawings	-	531	531
Depreciation, Intangible asset amortisation and impairment	1,404	1,356	3,276
Adjustments	2,108	4,854	7,701
Adjusted profit before tax	3,842	902	3,766
Interest receivable	(7)	(4)	(9)
Interest payable	80	113	228
Adjusted operating profit	3,915	1,011	3,985
Adjusted basic earnings per share*	8.10	1.95	8.11
Adjusted diluted earnings per share*	6.88	1.93	7.27
* Assumes a tax rate of 23% (2012: 24%)

6.    Taxation

The half yearly tax charge has been calculated at the estimated full year effective UK corporation tax rate of 23% (2012: 24%).

7.    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 six months ended 30 September 2013 was 36,511,363 (30 September 2012: 35,157,320, 31 March 2013: 35,289,555). 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 is 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 six months ended 30 September 2013. The adjusted weighted average number of Ordinary Shares so calculated for the period was 42,421,908 (30 September 2012: 35,454,359, 31 March 2013: 39,385,949). This is reconciled to the actual weighted number of Ordinary Shares as follows: 

		30-Sep-13	30-Sep-12	31-Mar-13
Weighted average number of Ordinary Shares		36,511,363	35,157,320	35,289,555
Weighted average number of dilutive Ordinary shares under option:
- to Liontrust Senior Incentive Plan		2,984,924	99,013	99,153
- to Liontrust Incentive Plan		198,995	198,026	198,305
- to Liontrust Option Plan		30,888	-	4,415
Dilutive effect of shares from Convertible unsecured loan stock		2,695,738	-	3,794,521
Adjusted weighted average number of Ordinary Shares		42,421,908	35,454,359	39,385,949

8.    Post balance sheet events

On the 15th October 2013 Liontrust announced that it has entered into a conditional share purchase agreement (the "SPA") to purchase (the "Proposed Acquisition") the entire issued ordinary share capital of North Investment Partners Limited ("North") from the existing North shareholders. Under the terms of the SPA, the Company has conditionally agreed to acquire the entire issued ordinary share capital of North for £1. The Proposed Acquisition completed on 15 October 2013 and North's AuM on completion was £123 million.

As at 31 December 2012 North's gross assets were £453,000 and for the financial year ending 31 December 2012 its loss before tax was £427,000.

9.    Intangible assets

Intangible assets represent investment management contracts that have been capitalised upon acquisition and are amortised on a straight-line basis over a period of 5 years. The intangible asset on the balance sheet represents investment management contracts as follows:

		30-Sep-13	30-Sep-12	31-Mar-13
		£'000	£'000	£'000
Contracts acquired from Occam Asset Management		53	883	204
Contracts acquired from Walker Crips Asset Managers Limited		8,670	11,119	9,894
		8,723	12,002	10,098

10.  Financial Assets

Assets held at fair value through profit and loss:

The Group's assets held at fair value through profit and loss represent units in the UK Authorised unit trusts and shares in sub-funds of the Liontrust Guernsey Fund Limited (a Guernsey domiciled Open ended investment company) held in the manager's box and are valued at bid price.

Assets held as available-for-sale:                                              

The Group's assets held as available-for-sale represent shares in the Liontrust GF European Absolute Alpha Return Fund (a sub-fund of Liontrust Global Funds PLC (a Dublin Open ended investment company) and are valued at bid price).                                                     

11.  Convertible unsecured loan stock

During the period the Group converted £3,030,000 of Convertible unsecured loan stock into shares on 6 September 2013. The Group repurchased the outstanding balance of £70,000 on 12 September 2013.                                                                                       

12.  Related party transactions

During the six months to 30 September 2013 the Group received fees from unit trusts under management of £15,817,000 (2012: £8,107,000). Transactions with these unit trusts comprised creations of £338,218,000 (2012: £275,753,000) and liquidations of £189,849,000 (2012: £60,261,000). Directors can invest in unit trusts managed by the Group on commercial terms that are no more favourable than those available to staff in general. As at 30 September 2013 the Group owed the unit trusts £6,191,000 (2012: £11,141,000) in respect of unit trust creations and was owed £9,671,000 (2012: £918,000) in respect of unit trust cancellations and fees.                      

During the six months to 30 September 2013 remuneration paid to key decision makers (the Executive Directors) was  £478,000 (2012: £400,000).                                                                                                                                                                                                                                          

13.  Key risks

The Directors have identified the risks and uncertainties that affect the Group's business and believe that they will be substantially the same for the second half of the year as the current risks as identified in the 2013 Annual Report.  These can be broken down into risks that are within the management's influence and risks that are outside it.        

Risks that are within management's influence include areas such as the expansion of the business, prolonged periods of under-performance, loss of key personnel, human error, poor communication and service leading to reputational damage and fraud.     

Risks outside the management's influence include falling markets, terrorism, a deteriorating UK economy, investment industry price competition and hostile takeovers.             

Management monitor all risks to the business, they record how each risk is mitigated and have warning flags to identify increased risk levels. Management recognise the importance of risk management and view it as an integral part of the management process which is tied into the business model and is described further in the Risk management and internal control section on page 22 of the 2013 Annual Report and Note 2 "Financial risk management" on page 45 of the 2013 Annual Report.                       

14.  Directors' responsibilities

The Directors confirm that this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union, and that the Half Yearly Report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8.

By Order of the Board

John S. Ions                                                        Vinay K. Abrol

Chief Executive                                                  Chief Operating Officer and Chief Financial Officer

Forward Looking Statements                                                                                    

This report 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. Nothing in this announcement should be construed as a profit forecast.

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