Interim Management Statement

RNS Number : 6568G

Liontrust Asset Management PLC

04 February 2010

 



Embargoed until 7am on 4 February 2010

Stock Exchange Announcement

LIONTRUST ASSET MANAGEMENT PLC

Interim Management Statement

Liontrust Asset Management PLC ("Liontrust" or "the Group"), the specialist independent fund management group, is today issuing its Interim Management Statement for the period from 1 October 2009 to 31 December 2009 (the "Interim Period") as required by the FSA's Disclosure and Transparency Rules.

Funds under Management

On 31 December 2009, our funds under management stood at £1.180 billion and were broken down by type and process as follows:-

Process	Total £m	Institutional £m	UK Retail £m	Offshore Funds £m
Cashflow Solution	864	316	495	53
The Economic Advantage	245	0	245	0
Fixed Income	16	0	0	16
Indexed	55	0	55	0
Total	1,180	316	795	69

Note: previously, figures for UK Retail and Offshore Funds have been shown as a combined total under the heading "Retail and Offshore".

Performance fees

Performance fees of £3,332,000 were earned in the Interim Period (1 October 2008 to 31 December 2008: £7.0 million). Of this amount, £2,183,000 was earned from the Liontrust Credit Fund.

Funds Flows

A reconciliation of fund flows and funds under management over the Interim Period is as follows:-

	Total £m	Institutional £m	UK Retail £m	Offshore Funds £m
Opening FuM - 1 Oct 2009	1,280	368	805	107
Inflows	37	5	24	8
Outflows	(168)	(65)	(57)	(46)
Net flows	(131)	(60)	(33)	(38)
Market movement	31	8	23	0
Closing FuM - 31 Dec 2009	1,180	316	795	69

Institutional fund flows: £34m of the outflows relate to a single institutional client who was originally invested in the Large Cap. Process and in October 2009 reallocated to a global equities mandate. The majority of the balance of the outflows during the Interim Period relate to cash flow movements on existing accounts.

UK retail fund flows: We enjoyed positive net inflows into the Liontrust Continental Europe Fund, the Liontrust European Absolute Return Fund and the Liontrust First Opportunities Fund. Other UK retail funds suffered outflows.

Offshore fund flows: Of the £46 million of outflows, £33 million relates to the redemption of seed capital by the Company and redemptions from the Liontrust Credit Fund when its gate on redemptions was lifted. All the "gate" related redemptions were lodged prior to Liontrust taking over the mandate for the fund.

Directorate changes

Graham Hooper joins with immediate effect as an independent non-executive director. Graham brings a wealth of experience to Liontrust and has extensive knowledge of funds distribution through independent financial advisers ("IFA"), platforms, multi-managers, discretionary fund managers and private wealth managers. He is well known to the IFA market having served in senior roles at AWD Chase de Vere and Charcol Holden Meehan.

Bernard Asher steps down as non-executive director with immediate effect. We would like to thank Bernard for the invaluable and integral role he has played in Liontrust's development over the past five years.

Planned Fund Launches

A number of fund launches are planned for the next few months for the Credit and Global Equity teams once their documented investment processes have been completed. These launches will include the Liontrust Credit Absolute Return Fund, which will be an absolute return sub-fund of our Luxembourg SICAV based on the same investment process as the Liontrust Credit Fund.

Fund Performance	1 Year*			3 Years*
	Performance %	Quartile	Relative to Index	Performance %	Quartile	Relative to Index
Liontrust First Income Fund                            (manager change 25.3.09) [FTSE All-Share Index]	43.78	1	(0.18)	N/A	N/A	N/A
Liontrust First Growth Fund                           (manager change 25.3.09) [FTSE All-Share Index]	34.53	4	(9.43)	N/A	N/A	N/A
Liontrust First Large Cap. Fund             (manager change 25.3.09) [FTSE All-Share Index]	31.13	4	(12.83)	N/A	N/A	N/A
Liontrust First Opportunities Fund               [FTSE All-Share Index]	41.09	1	10.97	4.71	1	8.69
Liontrust Intellectual Capital Trust                 [FTSE Small Cap. Index]	41.47	3	(16.20)	(3.42)	1	29.69
Liontrust Continental Europe Fund                [FTSE All-World Developed Europe ex UK]	21.99	2	2.09	8.18	1	2.38
Liontrust Pan-European Fund                  (launch 1.6.07) € [FTSE All-World Developed Europe Index]	36.91	1	4.06	30.99	2	(1.08)
Liontrust European Absolute Return Fund  (launch 8.7.09)	(5.76)	4	N/A	N/A	N/A	N/A
Liontrust European Long/Short Fund      (launch 6.12.06) €	(0.05)	N/A	N/A	42.41	N/A	N/A
Liontrust Credit Fund	36.51	N/A	N/A	42.73	N/A	N/A

Source: Financial Express, total return, to 31 December 2009, except Liontrust Credit Fund where the source is Liontrust Investment Funds Ltd         

* Where the full 1 or 3 year performance data are not available, performance has been measured from the fund manager/launch date listed in the first column.

Cost reduction and restructuring programme

The Group's strategy remains to build a fund management business that is broadly based across fund management teams, products and distribution. But the board has reviewed the Group's cost base in light of the current level of funds under management and has decided to implement a cost reduction and restructuring programme that will aim to reduce administration costs by approximately £2.5 million per annum, with effect from the next financial year. This will enable Liontrust to focus its efforts and resources on those areas where the Group is most likely to attract assets.

The cost reduction and restructuring programme is currently expected to include the closure of our North American sales and marketing office, a reduction in other employment and operating costs, and restructuring the Group's UK operating subsidiaries into limited liability partnerships.

The cost of implementing the programme is expected to be in the region of £1.4 million, which will be incurred in the current financial year.

Global Equity Fund Management Team

On 22 June 2009, Liontrust announced that Ross Hollyman would be joining the Group from GAM in January 2010. Liontrust confirms that Mr Hollyman has joined the Group and his appointment has been very well received by clients and investors. Liontrust has also recruited the three members of Mr Hollyman's investment team at GAM, Nikki Martin, Rob Cornish and Tom Ayres, who joined Liontrust on 1 October 2009. 

Since then, the team has been jointly developing the Value, Growth and Dynamic equity investment processes (the "Global Equity Investment Processes"). This, together with the arrangements described below, will enable Liontrust to launch a number of collective investment vehicles, including long/short investment funds, long only unit trusts and offshore funds based on the new Global Equity Investment Processes. They will also be offered to the institutional market via segregated accounts and pooled institutional funds. 

Consistent with its ambitions for the strategic development of the business, Liontrust is focused on seeking to provide an appropriate level of equity incentivisation for its employees.  Accordingly, Liontrust has today entered into an agreement (conditional upon, amongst other things, Liontrust's shareholders approving the proposals) to implement the proposals described in the announcement on 22 June 2009 by way of an investment in a new group company, Liontrust Global Investment Services Limited ("LGIS").  LGIS has been established to provide global equity fund management services to support the Global Equity Investment Processes.  

The principal terms of the proposals provide for the acquisition by Liontrust of a 51 per cent equity interest in LGIS, with the balance to be acquired by Ross Hollyman, Nikki Martin, Rob Cornish and Tom Ayres (the "LGIS Team"), all shareholders acquiring their equity interests at the same price per share.  Liontrust will also provide funding to LGIS, both for regulatory and working capital purposes, resulting in a total investment by Liontrust in LGIS of £0.85 million (comprising £0.15 million subscription for ordinary shares in LGIS and £0.7 million subscription for cumulative redeemable preference shares in LGIS). 

Liontrust will be granted an option to buy out the LGIS Team after five years at a price based on a 25 per cent discount to Liontrust's revenue multiple (derived from its market capitalisation) at the time of the buy out. This option will be exercisable early where the consideration that would be payable on exercise represents 97.5% or more of the maximum consideration payable by Liontrust (as described below). The LGIS Team will also be granted an option to require Liontrust to buy out their shares in LGIS after three years based on the same valuation formula.  Both the option granted to Liontrust and the option granted to the LGIS Team shall lapse eight years after the date of grant.

The consideration payable by Liontrust under either option (and, in certain circumstances, upon the LGIS Team ceasing to be Liontrust employees) is to be satisfied through the issue of new Liontrust shares or, at Liontrust's discretion, through a mixture of new Liontrust shares and cash or in cash only. The maximum consideration payable under either option (and, in certain circumstances, upon the LGIS Team ceasing to be Liontrust employees) granted to Liontrust will be capped such that any payment would not exceed 15 per cent of the share price of Liontrust at the relevant date multiplied by the issued share capital of Liontrust at the time of grant and less the amount Liontrust paid for its ordinary shares in LGIS.  Any new Liontrust shares issued as consideration will be subject to lock-up arrangements considered appropriate by Liontrust.

Liontrust or another of its group companies will be responsible for all reasonable operating expenses for LGIS, which will be cross-charged to LGIS on an arms' length basis.

Additional notes: LGIS is a new group company, established to provide global equity fund management services in relation to the investment processes developed by Ross Hollyman and his team. As at the date of this announcement, LGIS has not traded and its gross assets and profits were nil. The first accounts of LGIS will be for the period to 31 March 2010.

Further information regarding the proposals referred to above will be contained in a circular, which is currently expected to be sent to shareholders in March for the purposes of approving the proposals. 

It is expected that the administration costs for the Global Equity team for the financial year ending 31 March 2010 will be in the region of £0.5 million*. Administration costs for the next financial year are expected to be in the region of £1.3 million*.

* includes employment costs (excludes any revenue share), other operating costs (including marketing and fund set up) and the costs related to setting up LGIS.

Preliminary Results

The Group's preliminary results are due to be announced on 16 June 2010 with the pre-close announcement scheduled for 25 March 2010.

For further information please contact:

Liontrust Asset Management PLC                           020 7412 1700

Nigel Legge                                                                  www.liontrust.co.uk

Vinay Abrol

Simon Hildrey - Marketing & Communications Director

Altium                                                                         020 7484 4040

Sam Fuller

Paul Chamberlain

Background on Graham Hooper

Graham Hooper has worked in the financial services sector for over 25 years, a large part of which was at Chase de Vere PLC where, latterly, he was marketing director. Specific skills include brand and product development, business integration, PR, customer development, team building and motivation and channel marketing.  He was responsible for a number of major successes, including the integration of Charcol Holden Meehan into the Bradford & Bingley Group plc, establishing Chase de Vere as a top ten IFA with a turnover in excess of £30 million and successfully changing the UK marketing strategy of AWD PLC.

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.

Forward Looking Statements

This 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.

Other information

The release, publication, transmission or distribution of this announcement in, into or from 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.

ENDS

 

END

 

 

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