TIDMLIO
RNS Number : 6705S
Liontrust Asset Management PLC
27 June 2018
Embargoed until 0700 hours, Wednesday 27 June 2018
LIONTRUST ASSET MANAGEMENT PLC
FULL YEAR RESULTS FOR THE YEARED 31 MARCH 2018
Liontrust Asset Management Plc ("Liontrust", the "Company", or
the "Group"), the independent fund management group, today
announces its results for the year ended 31 March 2018.
Results:
-- Adjusted profit before tax of GBP27.4 million (2017: GBP17.2 million), an increase of 59%
-- Adjusted diluted earnings per share of 42.7 pence per share
(2017: 29.8 pence per share), an increase of 43%
-- Profit before tax of GBP12.3 million (2017: GBP9.1 million),
an increase of 35%. This includes costs of GBP15.0 million (2017:
GBP8.1 million) relating to the amortisation of intangible assets
and other non-cash and non-recurring costs (see note 5 below)
-- Revenues of GBP77 million (2017: GBP51 million), an increase
of 49%. This includes GBP4.5 million of performance fee revenues
(2017: GBP4.0 million)
Dividend:
-- Second Interim dividend per share of 16.0 pence (2017: 11.0
pence), which will be payable on 10 August 2018. This brings the
total dividend per share for the financial year ending 31 March
2018 to 21.0 pence (2017: 15.0 pence), an increase of 40%
Assets under management:
-- On 31 March 2018, assets under management ("AuM") were
GBP10.5 billion (2017: GBP6.5 billion), an increase of 61%
-- Three funds have been successfully launched for the Global
Fixed Income team with a total of GBP214 million AuM as at 25 June
2018
-- AuM as at close of business on 25 June 2018 were GBP11.347 billion
Flows:
-- Net inflows for the year to 31 March 2018 of GBP1,004 million (2017: GBP482 million)
Commenting on the results, John Ions, Chief Executive, said:
"We have made substantial progress over the past year, posting
impressive net sales and growth in AuM, a significant increase in
revenue and profit, and broadened our fund management capability
and client base.
There have been net inflows of GBP1 billion, the eighth
successive year of positive sales, and our AuM increased to GBP10.5
billion. The Sustainable Investment team joined on 1 April 2017 and
its AuM now stands at GBP3 billion. The team has delivered strong
performance in an area of increasing client focus.
The new financial year has begun well, raising GBP214 million
for the launch of three funds managed by our Global Fixed Income
team. This and good flows into other teams has now taken our AuM to
GBP11.3 billion compared to GBP6.5 billion on 1 April 2017.
This demonstrates the continued demand for active fund managers
with robust investment processes and proven track records.
The strong year for distribution is reflected in our financial
results, with the adjusted profit before tax increasing by 59% to
GBP27.4 million and revenues rising by 49% to GBP77 million.
The Distribution team is being strengthened through the
recruitment of Frank Doyle as Head of Institutional Business.
Frank, who is joining Liontrust in September, has extensive
experience and strong relationships with consultants and
institutional investors and will enhance our business in this part
of the market.
I have often talked about the need for a strong foundation from
which to build. As we continue to grow, the progress made over the
last year in investment, client servicing and brand awareness gives
me great confidence for the future."
For further information please contact:
Liontrust Asset Management 020 7412 1700
John Ions, Vinay Abrol www.liontrust.co.uk
Simon Hildrey - Chief Marketing Officer
Numis Securities Limited 020 7260 1000
Charles Farquhar
Macquarie Capital (Europe) Limited 020 3037 2000
Advisory - Jonny Allison, Kavita Choitram
Corporate Broking - Alex Reynolds, Nicholas Harland
Chairman's Statement
Introduction
This has been a year of strong growth and expansion for
Liontrust. We delivered GBP1 billion in net inflows and our assets
under management (AuM) increased by 61% to GBP10.47 billion. This
is a tribute to the leadership of the business, the talent we have
across Liontrust and the investment we have made over the past
eight years in our fund management teams, distribution, marketing
and the brand.
We have continued to strengthen our fund management capability
through the Sustainable Investment and Global Fixed Income ("GFI")
teams. After joining Liontrust on 1 April 2017, the AuM of the
Sustainable Investment team increased by GBP500 million over the
financial year to reach nearly GBP3 billion. The GFI team is an
excellent addition with their experience, high profile and strong
track record.
These two teams have provided the business with further
diversification by asset class and clients, both in the UK and
internationally. They also provide clients with great reassurance
at a time of increased geopolitical uncertainty.
We are now coming to the end of 10 years of Central Banks
experimenting with unconventional measures to keep interest rates
low and flood liquidity into the system to fend off a depression
and strengthen the banking system. The speed of change has
accelerated as we face numerous potential or actual blow-ups each
year. The currency crisis in Argentina and Turkey, Brexit, trade
tariffs and the near meltdown of the financial markets in Italy are
just a few on the table as I write.
It is nigh on impossible to lay down a road map for the future,
not least because the President of the USA is shaking all the trees
in the orchard at the same time, and where the apples will fall is
anybody's guess. Whether one is heartened by his advice to Kim
Jong-un to build "Condos" and hotels on the beaches in North Korea
is a moot point!
A key strength of the fund managers at Liontrust is that despite
all of this global noise going on, they continue to run investors'
money according to clear, well defined investment processes that
are predictable and repeatable.
We welcomed Sophia Tickell to the Board on 1 October 2017 as an
Independent Non-executive Director and she has been a strong
addition for Liontrust. Sophia has been providing invaluable
insight having worked with asset managers for more than 15 years
and through her background in and extensive knowledge of ESG.
I would like to highlight the hard work and the contribution of
the management and staff at Liontrust to the continued success of
the business and to thank our shareholders and investors for their
ongoing support and loyalty to the company. This commitment will
enable us to continue on our growth path.
Results
Adjusted profit before tax was GBP27.378 million (2017:
GBP17.235 million). Adjusted profit before tax is disclosed in
order to give shareholders an indication of the profitability of
the Group excluding non-cash (depreciation, intangible asset
amortisation and share incentivisation related) expenses and
non-recurring (professional fees relating to acquisition, cost
reduction, restructuring and severance compensation related)
expenses ("Adjustments"), see note 5 below for a reconciliation of
adjusted profit (or loss) before tax.
Profit before tax is GBP12.313 million (2017: GBP9.103
million).
Dividend
The success in fund performance and distribution has resulted in
an increase in revenues excluding performance fees of 53% and a 59%
increase in our adjusted profit before tax to GBP27.4 million. This
has enabled the Board to declare a second interim dividend of 16.0
pence per share (2017: 11.0 pence), which will be payable on 10
August 2018 to shareholders who are on the register as at 6 July
2018, the shares going ex-dividend on 5 July 2018. The total
dividend for the financial year ending 31 March 2018 is 21.0 pence
per share (2017: 15.0 pence per share), an increase of 40% compared
with last year.
The Company has a Dividend Reinvestment Plan ("DRIP") that
allows shareholders to reinvest dividends to purchase additional
shares in the Company. For shareholders to apply the proceeds of
this and future dividends to the DRIP, application forms must be
received by the Company's Registrars by no later than 20 July 2018.
Existing participants in the DRIP will automatically have the
dividend reinvested. Details on the DRIP can be obtained from Link
Asset Services on 0371 664 0381 or at www.signalshares.com. (Calls
are charged at the standard geographic rate and will vary by
provider. Calls outside the United Kingdom will be charged at the
applicable international rate. Lines are open between 09:00 -
17:30, Monday to Friday excluding public holidays in England and
Wales).
Adrian Collins
Chairman
26 June 2018
Chief Executive's Statement
Introduction
Asset management has a central role to play in enabling people
to try to achieve their financial goals over the medium and long
term. This role will now continue throughout people's lives due to
greater longevity and with the onus increasingly being on
individuals to save and invest for their own futures.
Along with this structural opportunity for asset managers comes
a highly competitive market and greater scrutiny. To overcome these
challenges and to take advantage of the opportunities, we will
remain focused on what has brought us success and enabled us to
deliver eight successive years of positive inflows.
Key to this is our first-class investment proposition and the
talent of our fund management teams. By delivering what our clients
and investors expect, along with strong long-term performance,
through robust and repeatable investment processes, we will
continue to attract assets and retain loyalty.
At a time when attention is so focused on price and cost, it can
be easy to lose sight of the benefit of value. Those asset managers
able to demonstrate the added value of great active fund management
will retain a central role in looking after people's savings.
It is also important to deliver what investors want and not just
what asset managers want to provide. Since our Sustainable
Investment team joined us on 1 April 2017, we have seen a
significant increase in attention and demand for this way of
investing. You can see this clearly in the reaction to the fact
that if current trends continue, the weight of plastic in our seas
will exceed that of fish by 2050, according to the World Economic
Forum. It will no longer be an option for asset managers not to
have a view on Sustainable Investment.
Our Sustainable Investment team has vast experience, a clear
process and a focus on generating returns for investors as well as
seeking to benefit society through their holdings. The quality of
this and our other fund management teams is shown by the
independent recognition they are receiving. We have won seven fund
awards and two group awards over the past year and have been
shortlisted in eight categories at the Investment Week Fund Manager
of the Year Awards 2018 in July. Five of these are for Sustainable
funds within mainstream categories and two for the Economic
Advantage team, who celebrated 20 years of the investment process
in January 2018.
We will continue to add to and diversify our fund management
capability as and when the right opportunities arise and if they
meet the needs of investors. The GFI team, who joined us at the
start of 2018, demonstrate the attraction of Liontrust to
high-quality fund managers.
The addition of the Sustainable and GFI teams and the
significant investment we have made in Distribution is leading to a
further broadening of our client base and a deepening of
relationships. This is demonstrated by the fact that Liontrust had
the 11th largest net retail sales in the UK in 2017 and had the
13th largest total net sales, according to the Pridham Report.
Since the end of the 2017-18 financial year, we have successfully
launched three funds for the GFI team with a total of GBP214
million of assets as at 25 June 2018.
Another key factor behind the growth of Liontrust has been our
brand profile and engagement. To enhance this further, we have
added a new partnership deal with Durham County Cricket Club. This
includes sponsorship of its T20 team, the Durham Jets and the
Women's Academy, along with supporting the club's community
engagement through the Durham CCC Foundation and a new programme in
Kenya.
Our Liontrust community engagement programme is also expanding,
with a principal focus on financial education for schoolchildren.
It is vital, both for the long-term future of society and the
investment industry, that we give children and young people a
greater understanding of and confidence in how we manage money.
The talent we have at Liontrust and the ongoing investment we
are making in the business gives us the ability to continue to
overcome the challenges we may face and capitalise on the many
opportunities ahead of us.
Assets under Management
On 31 March 2018, our AuM stood at GBP10.475 billion and were
broken down by type and process as follows:-
Offshore
Process Total Institutional UK Retail Multi-Asset Funds
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
Cashflow Solution 973 551 313 - 109
Economic Advantage 4,974 386 4,507 - 81
Macro Thematic 442 153 264 - 25
European Income 232 - 232 - -
Asia 114 - 104 - 10
Sustainable Investment 2,996 54 2,737 - 205
Multi-Asset 700 - - 700 -
Indexed 44 - 44 - -
Total 10,475 1,144 8,201 700 430
Funds Flows
Liontrust recorded net inflows of GBP1,004 million in the
financial year to 31 March 2018 (2017: GBP482 million). A
reconciliation of fund flows over the financial year is as
follows:-
Offshore
Total Institutional UK Retail Multi-Asset Funds
GBPm GBPm GBPm GBPm GBPm
Opening AuM - 1 April
2017 6,523 1,044 4,648 612 219
Net flows 1,004 (24) 906 76 46
Acquisitions* 2,518 49 2,316 - 153
Market and Investment
performance 430 75 331 12 12
Closing AuM - 31 March
2018 10,475 1,144 8,201 700 430
* Relates to the acquisition of Alliance Trust Investments
Limited which completed on 1 April 2017.
Outlook
We are well positioned to continue the growth of Liontrust. We
have further diversified our fund management proposition with the
addition of two high quality teams to expand our already strong
capability. Through the arrival of the Sustainable Investment and
Global Fixed Income teams and our greater Distribution reach, we
have been expanding our client base in the UK and
internationally.
This is enhanced by our strong brand and the investment we have
made in the infrastructure of the business, particularly over the
past year. Our brand profile not only gives us great awareness, it
also engenders a positive opinion of and engagement with Liontrust
among clients and investors. This builds trust and loyalty for the
future.
John Ions
Chief Executive
26 June 2018
Extracts from the Strategic Report
UK Retail fund performance
Quartile Quartile Quartile Quartile Launch
ranking ranking ranking ranking Date/Manager
- Since - 5 year - 3 year - 1 year Appointed
Launch/Manager
Appointed
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust UK
Growth Fund 1 2 1 2 25/03/2009
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust Special
Situations Fund 1 1 1 1 10/11/2005
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust UK
Smaller Companies
Fund 1 1 1 2 08/01/1998
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust UK
Micro Cap Fund 2 - - 2 09/03/2016
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust Macro
Equity Income
Fund 1 3 4 3 31/10/2003
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust Macro
UK Growth Fund 2 3 4 3 01/08/2002
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust European
Growth Fund 1 2 1 4 15/11/2006
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust Asia
Income Fund 2 2 3 3 05/03/2012
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust European
Income Fund 3 4 4 4 15/12/2005
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust European
Enhanced Income
Fund (Hedged) 4 4 4 2 30/04/2010
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust Global
Income Fund 3 - 3 2 03/07/2013
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust Monthly
Income Bond
Fund 1 1 1 1 12/07/2010
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust SF
Absolute Growth
Fund 4 1 1 1 19/02/2001
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust SF
Corporate Bond
Fund 1 1 1 1 20/08/2012
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust SF
Cautious Managed
Fund 1 - 1 1 23/07/2014
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust SF
Defensive Managed
Fund 1 - 1 1 23/07/2014
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust SF
European Growth
Fund 2 2 2 3 19/02/2001
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust SF
Global Growth
Fund 4 2 2 1 19/02/2001
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust SF
Managed Fund 2 1 1 1 19/02/2001
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust UK
Ethical Fund 2 1 1 1 01/12/2000
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust SF
UK Growth Fund 2 1 1 1 19/02/2001
-------------------- ---------------- ---------- ---------- ---------- --------------
Source: Financial Express, total return (income reinvested and
net of fees), bid to bid, to 31 March 2018 unless otherwise stated,
based on primary share classes. The above funds are all UK
authorised unit trusts or UK authorised ICVCs (primary 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.
Quartile rankings correct as at 6 April 2018.
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2018
Year Year
ended ended
31-Mar-18 31-Mar-17
Notes GBP'000 GBP'000
Revenue 76,861 51,508
Cost of sales (50) (50)
-------------------- ----------
Gross profit 3 76,811 51,458
Realised profit on sale of financial
assets 3 6
Unrealised (loss)/profit on financial
assets (142) 134
Contingent consideration on ATI acquisition (912) -
Administration expenses 4 (63,450) (42,506)
-------------------- ----------
Operating profit 12,310 9,092
Interest receivable 3 11
-------------------- ----------
Profit before tax 12,313 9,103
Taxation (3,590) (2,275)
-------------------- ----------
Profit for the year 8,723 6,828
Other comprehensive income
Unrealised profit on financial assets 33 -
Total comprehensive income 8,756 6,828
==================== ==========
Pence Pence
Earnings per share
Basic 6 17.76 15,15
Diluted 6 16.88 14.75
The notes 1 to 12 form an integral part of this condensed
consolidated financial information.
Consolidated Balance Sheet
As at 31 March 2018
31-Mar-18 31-Mar-17
GBP'000 GBP'000
Assets
Non current assets
Intangible assets 13,521 3,640
Goodwill 11,872 -
Property, plant and equipment 207 195
Deferred tax assets - 964
---------- ----------
Total non current
assets 25,600 4,799
Current assets
Trade and other receivables 79,080 68,066
Financial assets 2,076 1,404
Cash and cash equivalents 30,775 16,956
Total Current assets 111,931 86,426
---------- ----------
Liabilities
Non current liabilities
Deferred tax liability (918) -
DBVAP liability (838) (322)
Acquisition related contingent -
liability (2,912)
---------- ----------
Total non current
liabilities (4,668) (322)
---------- ----------
Current liabilities
Trade and other
payables (83,104) (63,960)
Corporation tax
payable (1,403) (393)
Total Current liabilities (84,507) (64,353)
---------- ----------
Net current assets 27,424 22,073
---------- ----------
Net assets 48,356 26,550
========== ==========
Shareholders' equity attributable
to owners of the parent
Ordinary shares 495 454
Share premium 15,796 -
Deferred consideration 3,959 -
Capital redemption reserve 19 19
Retained earnings 31,853 28,936
Own shares held (3,766) (2,859)
Total equity 48,356 26,550
========== ==========
The notes 1 to 12 form an integral part of this condensed
consolidated financial information.
Consolidated Cash Flow Statement
For the year ended 31 March 2018
Year Year
ended ended
31-Mar-18 31-Mar-17
GBP'000 GBP'000
Cash flows from operating activities
Cash received from operations 88,032 56,460
Cash paid in respect of operations (60,783) (42,489)
Net cash paid for changes in unit
trust receivables and payables 92 (363)
-------------------------- --------------------------
Net cash generated from
operations 27,341 13,608
Interest received 3 11
Tax paid (2,774) (2,705)
-------------------------- --------------------------
Net cash generated from operating
activities 24,570 10,914
-------------------------- --------------------------
Cash flows from investing activities
Purchase of property and equipment (159) (73)
Acquisition of Argonaut investment
management contracts - (4,083)
Acquisition of ATI (net of cash acquired) (929) -
Purchase of ICIs - (95)
Purchase of DBVAP Financial Asset (920) (940)
Purchase of seeding investments - (252)
Sale of seeding investments 54 151
-------------------------- --------------------------
Net cash used in investing activities (1,954) (5,292)
-------------------------- --------------------------
Cash flows from financing activities
Purchase of own shares (930) (1,738)
Dividends paid (7,867) (5,895)
-------------------------- --------------------------
Net cash used in financing activities (8,797) (7,633)
-------------------------- --------------------------
Net (decrease)/increase in cash and cash
equivalents 13,819 (2,011)
Opening cash and cash equivalents* 16,956 18,967
Closing cash and cash equivalents 30,775 16,956
========================== ==========================
* Cash and cash equivalents consists only of cash balances.
The notes 1 to 12 form an integral part of this condensed
consolidated financial information.
Consolidated Statement of Change in Equity
For the year ended 31 March 2018
Ordinary Share Deferred Capital Retained Own shares Total
shares Premium consideration redemption earnings held Equity
GBP GBP '000 GBP
'000 GBP '000 GBP '000 GBP '000 GBP '000 '000
Balance at 1 April
2017 brought forward 454 - - 19 28,936 (2,859) 26,550
Profit for the
year - - - - 8,723 - 8,723
Other comprehensive
income - - - - 33 - 33
Total comprehensive
income for the
year - - - - 8,756 - 8,756
Dividends paid - - - - (7,867) - (7,867)
Shares issued 41 15,796 - - - - 15,837
Purchase of own
shares - - - - - (965) (965)
Deferred consideration
ATI - - 3,959 - - - 3,959
EBT share option
settlement - - - - (58) 58 -
Equity share options
issued - - - - 2,086 - 2,086
Balance at 31
March 2018 495 15,796 3,959 19 31,853 (3,766) 48,356
=========================== ========= ========= ============== =========== ========= =========== ========
Consolidated Statement of Change in Equity
For the year ended 31 March 2017
Ordinary Share Capital Retained Own shares Total
shares premium redemption earnings held Equity
GBP GBP
'000 GBP '000 GBP '000 GBP '000 GBP '000 '000
Balance at 1 April
2016 brought forward 454 17,692 19 9,330 (1,317) 26,178
Profit for the
year - - - 6,828 - 6,828
Total comprehensive
income for the
year - - - 6,828 - 6,828
Dividends
paid - - - (5,895) - (5,895)
Capital reduction - (17,692) - 17,692 - -
Purchase of own
shares - - - - (1,738) (1,738)
Purchase of ICI's - - - (95) - (95)
EBT share option
settlement - - - (133) 196 63
Equity share options
issued - - - 1,209 - 1,209
Balance at 31 March
2017 454 - 19 28,936 (2,859) 26,550
======================== ========= ========= =========== ========= =========== ========
The notes 1 to 12 form an integral part of this condensed
consolidated financial information.
Notes to the Financial Statements
1. Accounting policies
The Group's accounting policies are consistent with those set
out in the Annual Report and Accounts for the year ended 31 March
2018.
2. Segmental reporting
The Group operates only in one business segment - Investment
management.
The Group offers different fund products through different
distribution channels. All key financial, business and strategic
decisions are made centrally by the Executive directors of the
Board, which determines the key performance indicators of the
Group. The Board 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 (Gross Profit)
Year Year
Ended ended
31-Mar-18 31-Mar-17
GBP'000 GBP'000
- Revenue(1) 72,411 47,459
- Performance fee revenue 4,450 4,049
---------- ----------
Total revenue 76,861 51,508
============================ ========== ==========
(1) Revenue includes investment management fees, initial charges
and commissions and box profits.
4. Administration expenses
Year ended Year ended
31-Mar-18 31-Mar-17
GBP'000 GBP'000
Employee related expenses
Director and employee costs 9,721 5,721
Pensions 585 305
Share incentivisation expense 2,929 1,487
DBVAP expense 805 188
Severance compensation 430 53
---------------------------------------- ----------- -----------
14,470 7,754
Non-employee related expenses
Members drawings charged as an expense 25,357 19,062
Share incentivisation expense members 1,296 1,762
Members severance compensation 339 165
Professional services (restructuring,
acquisition related and other)* 5,840 1,359
Depreciation and Intangible asset
amortisation 2,481 3,118
Other administration expenses 13,667 9,286
48,980 34,752
---------------------------------------- ----------- -----------
63,450 42,506
======================================== =========== ===========
* Includes costs in connection with replacement of front office
systems, costs relating to the acquisition of ATI, legal costs
relating to claim by former member and costs relating to a claim
relating to the acquisition of Walker Crips Asset Managers
Limited.
5. Adjusted profit before tax
Adjusted profit before tax is disclosed in order to give
shareholders an indication of the profitability of the Group,
non-cash (depreciation, intangible asset amortisation and share
incentivisation related) expenses and non-recurring (acquisition,
cost reduction, restructuring, share incentivisation and severance
compensation related) expenses ("Adjustments"), and is reconciled
in the table below.
Year ended Year ended
31-Mar-18 31-Mar-17
GBP'000 GBP'000
Profit for the year 8,723 6,828
Taxation 3,590 2,275
---------------------------------------------------- ----------- -----------
Profit 12,313 9,103
Share incentivisation expense 4,225 3,249
Other comprehensive income (unrealised gain 33 -
on financial assets)
DBVAP expense 805 188
Severance compensation 769 218
Acquisition related contingent consideration 912 -
Professional services (restructuring, acquisition
related and other)(1) 5,840 1,359
Depreciation and Intangible asset amortisation 2,481 3,118
----------------------------------------------------
Adjustments 15,065 8,132
Adjusted profit before tax 27,378 17,235
Interest receivable (3) (11)
Adjusted operating profit 27,375 17,224
==================================================== =========== ===========
Adjusted basic earnings per share(2) 45.14 30.60
Adjusted basic earnings per share (excluding
performance fees) (2)(3) 42.53 28.19
Adjusted diluted earnings per share(2) 42.67 29.79
Adjusted diluted earnings per share (excluding
performance fees)(2)(3) 40.19 27.45
---------------------------------------------------- ----------- -----------
(1) Includes costs in connection with replacement of front
office systems, costs relating to the acquisition of ATI, legal
costs relating to claim by former member and costs relating to a
claim relating to the acquisition of Walker Crips Asset Managers
Limited.
(2) Assumes a tax rate of 19% (2017: 20%)
(3) Performance fee revenues contribution calculated in line
with operating margin of 35.6% (2017: 33.5%)
6. 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 year. The weighted average number
of Ordinary Shares was 49,125,724 for the year (2017: 45,059,188).
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 2018. The adjusted weighted average number of
Ordinary Shares so calculated for the year was 51,977,398 (2017:
46,285,217). This is reconciled to the actual weighted number of
Ordinary Shares as follows:
2018 2017
number number
Weighted average number of Ordinary
Shares 49,125,724 45,059,188
Weighted average number of dilutive Ordinary
shares under option:
- to the Liontrust Long Term Incentive
Plan 1,463,856 789,963
- to the Liontrust Option Plan - 30,949
- to the Deferred Bonus and Variable
Allocation Plan 372,620 395,144
- to the Liontrust Members Incentive
Plan - 9,973
Effect of dilution re: Alliance Trust
Investments acquisition 1,015,198 -
Adjusted weighted average number of
Ordinary Shares 51,977,398 46,285,217
=========== ===========
7. Financial assets
The Group holds financial assets that have been categorised
within one of three levels using a fair value hierarchy that
reflects the significance of the inputs into measuring the fair
value. These levels are based on the degree to which the fair value
is observable and are defined as follows:
a) Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets and
liabilities;
b) Level 2 fair value measurements are those derived from inputs
other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
c) Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data.
As at the balance sheet date all financial assets are
categorised as Level 1.
Assets held at fair value through profit and loss:
The Group's assets held at fair value through profit and loss
represent shares in the Liontrust GF Global Strategic Equity Fund,
and units in the Liontrust Global Income Fund, the Liontrust Macro
Equity Income Fund, the Liontrust UK Growth Fund and the Liontrust
Asia Income Fund. Any Foreign currency assets are translated at
rates of exchange ruling at the balance sheet date and any exchange
rate differences arising are shown in note 17 of the financial
statements.
Assets held as available-for-sale:
The Group's assets held as available-for-sale represent shares
in the GF Global Strategic Equity Fund, the GF European Smaller
Companies Fund, the GF European Strategic Equity Fund, The GF Asia
Income Fund, the GF Macro Equity Income Fund and the GF UK Growth
Fund (all sub-funds of Liontrust Global Funds PLC) and are valued
at bid price); and units in the Liontrust Global Income Fund, The
Liontrust Macro Equity Income Fund, The Liontrust Asia Income Fund
and the Liontrust UK Growth Fund. The gain on the fair value
adjustments during the year net of tax was GBP33,000 (2017:GBPnil).
Foreign currency assets are translated at rates of exchange ruling
at the balance sheet date and any exchange rate differences arising
are shown in note 17 of the financial statements.
8. Acquisition of Alliance Trust Investments Limited
On 1 April 2017 ("Completion Date"), the Company acquired the
entire issued share capital and obtained control of Alliance Trust
Investments Limited ("ATI") at a cost of GBP31.425 million (the
"Acquisition") from Alliance Trust Plc ("AT Plc"). As a result of
the Acquisition, the Group is expected to increase its offerings to
investors, both domestically and across Europe. It expects to
reduce costs and benefit from economies of scale following a
process of restructuring and integration.
The goodwill of GBP11.9 million arising from the Acquisition is
attributable to the acquired customer base and the expected
economies of scale and efficiency increases from combining the
operations of ATI and the Group.
The following table summarises the consideration paid for ATI,
the fair value of assets acquired and the liabilities assumed at
the Completion Date.
Consideration at 1 April 2017 GBP'000
Cash 9,629
Equity instruments (amount on completion) - 4,060,792
shares 15,837
Equity instruments (deferred consideration) -
1,015,198 shares 3,959
Contingent consideration 2,000
Total consideration 31,425
--------
Recognised amounts of identifiable assets acquired
and liabilities assumed
Cash and cash equivalents 8,700
Trade and other receivables 4,603
Trade and other payables (3,674)
Investment Management contracts 12,000
Deferred tax liabilities (2,076)
Total identifiable net assets 19,553
Goodwill 11,872
Total 31,425
--------
Acquisition related costs of GBP576,000 have been charged to
administrative expenses in the Consolidated Statement of
Comprehensive Income for the year ended 31 March 2017. Since the
Completion Date, the ATI business has contributed revenue of
GBP10.9 million and a net loss of GBP0.3 million (including
reorganisation costs).
Equity instruments issued
The equity instruments issued on the Completion Date comprise of
4.061 million of the Company's ordinary shares ("Ordinary Shares").
The Share Purchase Deed relating to the Acquisition stipulated that
Liontrust pay an initial consideration of GBP13.6 million to be
satisfied in Ordinary Shares in a number of shares calculated with
reference to the 30 day average of the Company's share price as at
15 December 2016. The fair value of the 4.061 million shares on
the
Completion Date was GBP15.8 million.
The Group agreed to pay AT Plc an initial consideration of
GBP15.8 million on the Completion Date, which was satisfied by the
allotment and issue of 4.061 million of Ordinary Shares calculated
with reference to the 30 day average of the Company's share price
as at 15 December 2016.
Additionally, the Group has agreed to pay AT Plc additional
consideration of GBP3.4 million on the first anniversary of the
Completion Date, which will be satisfied by the allotment and issue
of 1.015 million of Ordinary Shares calculated with reference to
the 30 day average of the Company's share price as at 15 December
2016. The Group has included GBP3.9 million as deferred
consideration related to the additional consideration, which
represents its fair value at the Completion Date.
The identifiable net assets acquired were accounted for at fair
value. The fair value of the intangible assets acquired was
calculated using a Multiple Periods Excess Earnings Model ('MPEEM')
which takes into account the future expected revenue and costs
linked to the assets acquired. The MPEEM model assisted the Group
in arriving at the valuation of GBP12 million which management
believe is appropriate.
There is an additional contingent consideration that may become
payable if, on the second anniversary of the completion date, the
average assets under management managed by the Sustainable
Investment team (the investment team acquired pursuant to the
Acquisition) for the 3 month period prior to this date is in excess
of GBP3 billion then the Group will pay an additional GBP3,000,000
in cash to AT Plc.
Based on facts and circumstances known at the interim accounting
date (30 September 2017) the fair value of the contingent
consideration was assessed as nil and no liability recorded. Prior
to the year end, with the assets under management having grown
considerably, the fair value of this liability was re-assessed.
Based on the assessment, it was identified that at acquisition
date, certain conditions existed which were not previously
considered when assessing the fair value of the liability.
Following the completion of the acquisition, the positive
fundflows were significantly higher than initially expected. The
perception of corporate instability surrounding AT Plc and to what
extent it would suppress demand for ATI's retails funds had not
been fully considered. Additionally management had not been fully
aware of the increase in UK investment consumer demand for
'Sustainable' investments.
These two factors were considered in the re-evaluation of
whether a liability should be recognised on acquisition date. Based
on a probability assessment model a measurement period adjustment
was recorded at a discounted value of GBP2,000,000 (GBP2,175,000
undiscounted value) which increased the Goodwill by a corresponding
amount. Further, GBP175,000 is expected to be recorded over a
period of 2 years (GBP87,000 in current financial year and
GBP88,000 in the next financial year) through the Statement of
Comprehensive Income to account for the difference between the
discounted and undiscounted values.
Further, the balance of GBP825,000 is recorded through the
Statement of Comprehensive Income to reflect that the entire
GBP3,000,000 will be payable.
Goodwill on acquisition is allocated to the Sustainable funds
cash generating unit ('CGU'). An assessment was made in relation to
impairment of the Goodwill where the recoverable amount was
calculated using an earnings model which used key assumptions such
as growth rate and discount rate. A reasonably possible change in
these assumptions would not result in an impairment.
9. Contingent assets and liabilities
The Group can earn performance fees on some of the segregated
and fund accounts that it manages. In some cases a proportion of
the fee earned is deferred until the next performance fee is
payable or offset against future underperformance on that account.
As there is no certainty that such deferred fees will be
collectable in future years, the Group's accounting policy is to
include performance fees in income only when they become due and
collectable and therefore the element (if any) deferred beyond 31
March 2018 has not been recognised in the results for the year.
10. Key risks
The Directors have identified the risks and uncertainties that
affect the Group's business and believe that they are substantially
the same for this year as the current risks as identified in the
2017 Annual Report and Accounts. 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.
11. Directors responsibility statement
To the best of their knowledge and belief, the Directors confirm
that:
The consolidated financial statements of Liontrust Asset
Management PLC, prepared on a going concern basis in accordance
with IFRS as adopted by the EU, give a true and fair view of the
assets, liabilities, financial position and profit of Liontrust
Asset Management PLC and the undertakings included in the
consolidation taken as a whole;
The announcement includes a fair summary of the development and
performance of the business and the position of Liontrust Asset
Management PLC and the undertakings included in the consolidation
taken as a whole and a description of the principal risks and
uncertainties that they face.
12. Events after the reporting period
On the 6th April 2018 the Company allotted a further 1,015,198
fully paid ordinary shares of 1p each to Alliance Trust Plc in
settlement of part of the consideration for the acquisition of
Alliance Trust Investments Limited which was completed on the 1st
April 2017.
Forward Looking Statements
This Full Year Results 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 Conduct Authority). Nothing in this
announcement should be construed as a profit forecast or be relied
upon as a guide to future performance.
The Annual Report and Accounts is expected to be posted to
shareholders on or around 4 July 2018.
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.
END
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR SEWFMMFASEEM
(END) Dow Jones Newswires
June 27, 2018 02:00 ET (06:00 GMT)
Liontrust Asset Management (LSE:LIO)
Historical Stock Chart
From Apr 2024 to May 2024
Liontrust Asset Management (LSE:LIO)
Historical Stock Chart
From May 2023 to May 2024