Interim Results - 6 months to 30 Sept 2007

Embargoed until 0700 hours, Monday 12th November 2007 Stock Exchange Announcement LIONTRUST ASSET MANAGEMENT PLC Interim results for the six months to 30 September 2007 Highlights Liontrust Asset Management PLC ("Liontrust" or "the Group"), the independent specialist equities fund management group, today announces its interim results for the six months ended 30 September 2007 (the "period"). Results and dividend * Profits before tax increased by 8% to Â£5.6 million (2006: Â£5.2 million). * Performance fees of Â£367,000 were earned during the period (2006: Â£ 134,000). Performance fees owing stand at Â£11 million and if out-performance is maintained will fall due for payment in the second half. These of course vary as performance varies and could be lost if performance suffers and would increase if performance were to be higher. * Basic earnings per share increased by 12% to 12.5 pence (2006: 11.1 pence). * Interim dividend increases by 14% to 2.5 pence (2006: 2.2 pence). Funds under Management * Funds under management increase to Â£5.5 billion (2006: Â£5.2 billion). * Funds now at Â£5.1 billion (as at 9 November 2007). * Â£116 million has been raised for the European investment process in the eleven months since launch. Commenting on these results, Nigel Legge, Chief Executive said: "These results show that the business is in good shape. We plan to grow our new European product through good performance and broader distribution across Europe and beyond. We believe our focus over the last twelve years on investment process, clear communication and the continuity of our fund management team will all play a part in gaining the confidence of new clients and further reinforce the confidence of existing clients." For further information please contact: Liontrust Asset Management PLC 020 7412 1700 Nigel Legge www.liontrust.co.uk Vinay Abrol Altium 020 7484 4040 Garry Levin Nick Tulloch Smithfield 020 7360 4900 Reg Hoare Miranda Good Chairman's Statement Results We are having a good year as these results testify. They show increases in profits, earnings per share and dividends compared with the same period last year and increased average funds under management at Â£5.569 billion compared with last year's Â£5.118 billion. Performance fee income has also increased. Profit before tax was 8% higher at Â£5.591 million (2006: Â£5.164 million), basic earnings per share was 12% higher at 12.51 pence (2006: 11.13 pence) and the interim dividend is 14% higher at 2.5 pence per share (2006: 2.2 pence per share). Performance Performance fees of Â£367,000 were earned in the period and these fees generated an operating profit, after compensation, of approximately Â£165,000. By comparison the operating profit contribution from performance fees in the six months to 30 September 2006 was Â£60,000. Performance fees owing stand at Â£11 million and if out-performance is maintained will fall due for payment in the second half. These of course vary as performance varies and could be lost if performance suffers and would increase if performance were to be higher. Performance of our funds in the calendar year to date has maintained a positive trend despite recent market volatility. The new European hedge fund is up 21.9% in the calendar year to the end of October and up 23.7% since launch. Specific performance statistics are widely available from many sources including our recently updated website, www.liontrust.co.uk. Funds under management On 30 September 2007 our funds under management stood at Â£5.457 billion, 5% higher than the level of Â£5.193 billion at the same time last year. By 9 November 2007 funds under management stood at Â£5.075 billion. Margin and Fund flows Annualised revenues as a percentage of average funds under management were 0.51% (last year 0.52%) while annualised profits as a percentage of average assets were 0.20%, the same as last year. A net Â£63 million of institutional assets was withdrawn in the period. Since 30 September 2007 a further net Â£452 million of institutional assets have been withdrawn, with inflows of Â£27 million in transition. The amount withdrawn since the period end, as previously reported, includes the termination of a Â£ 380 million Large Cap mandate, the financial impact of which is expected to be less than 3% on market expectations for this year's operating profits and could be more than offset by performance fees if they are maintained. Gross sales of our unit trusts and offshore funds averaged a healthy Â£26 million per month, totalling Â£155m for the period; net redemptions totalled Â£41 million in the period. Net redemptions for the period from 1 April 2007 to 9 November 2007 now stand at Â£42 million. European Team Our two new fund managers, Gary West and James Inglis-Jones, have continued to build on their excellent start. The new process rooted in behavioural finance and has been applied to a unit trust, a hedge fund, a Luxembourg SICAV and two segregated mandates. Â£116 million has been raised in the eleven months since launch of the process. We are confident of raising more money for these funds over the coming months. Performance of the portfolios to which the process is applied has been strong since the launch. Seed capital The Board has decided to use part of the Group's cash resources and take on some external debt to provide up to Â£7.5m of seed capital to our European hedge fund. The investment will be made on the fund's first anniversary of 1 December 2007. This seed capital investment will be treated as a non-current asset held for sale meaning that the effect of this investment on the results of operations will be either to increase or decrease revenues depending on how the investment performs. Sales and Marketing We continue to promote our funds to clients in the UK, Continental Europe and beyond where the number of professional firms that we are in contact with is increasing healthily. We believe that our twelve year track record, processes, level of funds managed - US$10 billion - transparency, healthy cash position, and a record of continuity in our fund management teams will be warmly welcomed by this audience of professional investors. Risks and uncertainties The Financial Services Authority ("FSA") has recently introduced the Disclosure and Transparency Rules ("DTR"). The Group is required to disclose additional information including description of the principal risks and uncertainties to the business for the remaining six months of the financial year and details of any related party transactions. The Group takes a cautious and pro-active approach to risk management. The key risks to the Group's business remain as those disclosed in our 2007 Annual Report, namely; risk of investment performance leading to customer loss; fund manager stability; outsourcing; and operational risk. The Group actively reviews these risks and sees them continuing to be the key risks going forward. Details of related party transactions can be found in note 8 below. Summary We believe that we can achieve a lot more in both product development and generating assets to manage and this remain our main focus. Our first half performance has given us a good start to the year, which we expect to build on in the coming months. I therefore look forward to reporting further progress in 2008 with our full year results. Bernard H Asher Chairman Consolidated Income Statement Six months to 30 September 2007 Six Six Year months to months to ended 30-Sep-07 30-Sep-06 31-Mar-07 (unaudited) (unaudited) (audited) Notes Â£'000 Â£'000 Â£'000 Continuing operations Revenue 14,223 13,503 30,236 Cost of sales (56) (77) (212) Gross profit 14,167 13,426 30,024 Administrative expenses 3 (9,140) (8,741) (19,141) Operating profit 5,027 4,685 10,883 Interest receivable 564 479 941 Profit before tax 5,591 5,164 11,824 Taxation (1,856) (1,681) (3,809) Profit for the period 3,735 3,483 8,015 Memo - Dividends paid 6 (3,790) (2,880) (3,563) Pence Pence Pence Basic earnings per share 5 12.51 11.13 26.03 Diluted earnings per share 5 11.96 10.78 25.17 Consolidated Balance Sheet As at 30 September 2007 30-Sep-07 30-Sep-06 31-Mar-07 (unaudited) (unaudited) (audited) Â£'000 Â£'000 Â£'000 Non current assets Property, plant and equipment 139 147 128 Deferred tax assets 644 251 595 783 398 723 Current assets Receivables 17,930 10,205 16,075 Assets held at fair value through profit and loss 512 497 455 Cash and cash equivalents 17,918 17,806 22,437 36,360 28,508 38,967 Liabilities Current liabilities Payables (21,297) (13,082) (24,273) Accruals (455) (452) (470) (21,752) (13,534) (24,743) Net current assets 14,608 14,974 14,224 Net assets 15,391 15,372 14,947 Shareholders' equity Ordinary shares 337 351 337 Share premium 8,923 8,900 8,907 Capital redemption reserve 15 - 15 Retained earnings 18,319 18,701 18,174 Own shares held (12,203) (12,580) (12,486) Total equity 15,391 15,372 14,947 Consolidated Cash Flow Statement Six months to 30 September 2007 Six Six Year months to months to ended 30-Sep-07 30-Sep-06 31-Mar-07 (unaudited) (unaudited) (audited) Â£'000 Â£'000 Â£'000 Cash flows from operating activities Cash inflow from operations 16,301 13,005 26,958 Cash outflow from operations (11,554) (9,719) (17,314) Cash (outflow)/inflow from changes in unit trust receivables and payables (3,564) (3,161) 1,304 Net cash generated from operations 1,183 125 10,948 Interest received 564 479 941 Tax paid (2,638) (1,577) (2,782) Net cash from operating activities (891) (973) 9,107 Cash flows from investing activities Purchase of property and equipment (43) (19) (28) Net cash from investing activities (43) (19) (28) Cash flows from financing activities Net proceeds from issue of new shares 16 - 7 Net cost of the cancellation of shares (94) - (5,418) Sale/(purchase) of own shares 283 (560) 94 Dividends paid to shareholders (3,790) (2,880) (3,563) Net cash used in financing activities (3,585) (3,440) (8,880) Net (decrease)/increase in cash and cash equivalents (4,519) (4,432) 199 Opening cash and cash equivalents* 22,437 22,238 22,238 Closing cash and cash equivalents 17,918 17,806 22,437 * Cash and cash equivalents consists only of cash balances. Consolidated Statement of Changes in Equity Six months to 30 September 2007 Share Share Capital Retained Own shares Total capital premium redemption earnings held Equity Â£ '000 Â£ '000 Â£ '000 Â£ '000 Â£ '000 Â£ '000 Balance at 1 April 2007 brought forward 337 8,907 15 18,174 (12,486) 14,947 Sale of shares by Employee Benefits Trust - - - - 283 283 Profit for the period - - - 3,735 - 3,735 Total recognised income for the year - - - 3,735 - 3,735 Dividends - - - (3,790) - (3,790) Issue of share capital * - 16 - - - 16 Cancellation of share capital** - - - (94) - (94) Equity share options issued - - - 294 - 294 Balance at 30 September 2007 337 8,923 15 18,319 (12,203) 15,391 * During the period 5,802 Ordinary Shares of 1 pence were issued; as the table above is disclosed in Â£'000, no amount is disclosed in additions to share capital. ** During the period 23,754 Ordinary Shares of 1 pence were cancelled; as the table above is disclosed in Â£'000, no amount is disclosed in deductions from share capital. Consolidated Statement of Changes in Equity Six months to 30 September 2006 Share Share Capital Retained Own shares Total capital premium redemption earnings held Equity Â£ '000 Â£ '000 Â£ '000 Â£ '000 Â£ '000 Â£ '000 Balance at 1 April 2006 brought forward 352 8,900 - 18,279 (12,580) 14,951 Sale of shares by Employee Benefits Trust - - - - - - Profit for the period - - - 3,483 - 3,483 Total recognised income for the year - - - 3,483 - 3,483 Dividends - - - (2,880) - (2,880) Issue of share capital - - - - - - Cancellation of share capital (1) - - (560) - (561) Equity share options issued - - - 379 - 379 Balance at 30 September 2006 351 8,900 - 18,701 (12,580) 15,372 Consolidated Statement of Changes in Equity Year to 31 March 2007 Share Share Capital Retained Own shares Total capital premium redemption earnings held Equity Â£ '000 Â£ '000 Â£ '000 Â£ '000 Â£ '000 Â£ '000 Balance at 1 April 2006 brought forward 352 8,900 - 18,279 (12,580) 14,951 Sale of shares by Employee Benefits Trust - - - - 94 94 Profit for the period - - - 8,015 - 8,015 Total recognised income for the year - - 8,015 - 8,015 Dividends - - - (3,563) - (3,563) Issue of share capital * - 7 - - - 7 Cancellation of share capital (15) - 15 (5,418) - (5,418) Equity share options issued - - - 861 - 861 Balance at 31 March 2007 337 8,907 15 18,174 (12,486) 14,947 * During the year 2,293 Ordinary Shares of 1 pence were issued; as the table above is disclosed in Â£'000, no amount is disclosed in additions to share capital. Notes to the Financial Statements 1 Principal Accounting policies a) Basis of preparation This interim report is unaudited and does not constitute statutory accounts within the meaning of s240 of the Companies Act 1985. The statutory accounts for 2007, which were prepared in accordance with International Financial Reporting Standards, as endorsed by the European Union ('IFRS'), and with those parts of the Companies Act 1985 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 s237 (2) or s237(3) of the Companies Act 1985. The interim report has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority ("DTR") and with IAS 34 'Interim Financial Reporting'. The accounting policies applied in these interim accounts are consistent with those applied in the Group's most recent annual accounts. During the period, the following Standards and Interpretations have been adopted, none of which have had a material impact on the financial statements of the Group: IFRS 7 Financial Instruments: Disclosures IFRIC 7 Applying the Restatement Approach under IAS 29 IFRIC 8 Scope of IFRS 2 IFRIC 9 Reassessment of Embedded Derivatives IFRIC 10 Interim Financial Reporting Impairments At the date of authorisation of these financial statements, the following Standards and Interpretations were in issue but not yet effective: IFRS 8 Operating Segments IFRIC 11 IFRS 2 - Group and Treasury Share Transactions IFRIC 12 Service Concessions Arrangements IFRIC 13 Customer Loyalty Programmes IFRIC 14 IAS 19 - The limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction 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, though IFRS7 will require further disclosure regarding financial instruments at the year end. 2 Segmental reporting The Group's operations consist only of investment management in the UK, as such, no segmental analysis is presented. 3 Administration expenses Six Six Year months to months to ended 30-Sep-07 30-Sep-06 31-Mar-07 (unaudited) (unaudited) (audited) Â£'000 Â£'000 Â£'000 Staff costs - Director and employee 6,698 6,314 14,473 costs - Share option expense 294 379 861 - Share option NI 36 43 118 liability - Holiday pay accrual (87) 1 24 adjustment Other administration 2,199 2,004 3,665 expenses 9,140 8,741 19,141 4 Taxation The interim tax charge has been calculated at the estimated full year effective corporation tax rate of 30% (2006: 30%). The share option expense has not been taken into account in determining profit before tax as this is not an allowable expense for taxation. As Liontrust European Investment Services Limited is 51% owned by the Group it falls below the 75% threshold required by HM Revenue & Customs in order to qualify for group tax relief. We have adjusted our interim tax charge accordingly. 5 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 2007 was 29,863,234 (30 September 2006: 31,291,737, 31 March 2007: 30,790,440). 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 six months ended 30 September 2007. The adjusted weighted average number of Ordinary Shares so calculated for the period was 31,228,330 (30 September 2006: 32,300,643, 31 March 2007: 31,839,738). This is reconciled to the actual weighted number of Ordinary Shares as follows: 30-Sep-07 30-Sep-06 31-Mar-07 number number number Weighted average number of Ordinary 29,863,234 31,291,737 30,790,440 Shares Weighted average number of dilutive Ordinary shares under option: - to Savings-Related Share Option 9,072 8,458 8,442 Scheme - to the Liontrust Enterprise 1,356,024 1,000,448 1,040,856 Management Incentive Scheme Adjusted weighted average number of 31,228,330 32,300,643 31,839,738 Ordinary Shares 6 Dividends The directors declare an interim dividend in respect of the current period of 2.5 pence per share (2006: 2.2 pence) this will be paid on 19 December 2007 to all shareholders on the register as at 23 November 2007. The shares will go ex-dividend on 21 November 2007. 7 Share Repurchases During the six months to 30 September 2007, the Group purchased 23,754 Ordinary Shares in the market for cancellation at an average price of 395.2 per share (including costs). The purchases were made because opportunities arose to acquire the Group's shares at prices that the Directors considered to be attractive. These share repurchases total approximately 0.07% of our issued share capital. The benefit to our earnings per share will be seen in the second half of the financial year and in future years. After the cancellations, there are 33,650,263 shares in issue. 8 Related Party Transactions During the six months to 30 September 2007 the Group received fees from unit trusts under management of Â£13,714,000 (2006: Â£12,361,000). Transactions with these unit trusts comprised creations of Â£77,939,000 (2006: Â£115,055,000) and liquidations of Â£189,307,000 (2006: Â£196,908,000). 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 2007 the Group owed the unit trusts Â£1,682,000 (2006: Â£591,000) in respect of unit trust creations and was owed Â£9,534,000 (2006: Â£2,967,000) in respect of unit trust cancellations and fees. 9 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 interim management report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8. Other information 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 announcement contains certain forward-looking statements with respect to the financial condition, results of operations and businesses and plans of the Company. 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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