TIDMLIO
RNS Number : 8257G
Liontrust Asset Management PLC
18 November 2022
Embargoed until 0700 hours, Friday 18 November 2022
LIONTRUST ASSET MANAGEMENT PLC
HALF YEAR REPORT FOR THE SIX MONTHSED
30 SEPTEMBER 2022
Liontrust Asset Management Plc ("Liontrust", the "Company", or
the "Group"), the independent fund management group, today
announces its Half Year Report for the six months ended 30
September 2022.
Results:
-- Adjusted profit before tax(1) of GBP42.9 million (2021:
GBP39.2 million(2) ), an increase of 9% compared to the equivalent
period last year.
-- Profit before tax of GBP14.1 million (2021: GBP31.1 million),
a decrease of 55% compared to the equivalent period last year. This
includes costs of GBP28.8 million (2021: GBP8.2 million(2) )
relating to acquisitions and associated restructuring costs; the
amortisation and impairment of the related intangible assets; and
other non-cash and non-recurring costs (see note 6 below).
-- Gross profit of GBP108.8 million (2021: GBP108.5 million), an
increase of 0.2% compared to the equivalent period last year.
-- Adjusted diluted EPS(1) of 53.87 pence (2021: 51.82 pence(2)
), an increase of 4.0% compared to the equivalent period last
year.
Dividend:
-- First Interim dividend per share of 22.0 pence (2021: 22.0 pence) .
Assets under management and advice:
-- Assets under management and advice ("AuMA") were GBP31.7
billion as at 30 September 2022, a decrease of 5.5% over the
financial year to date and 11% compared to AuMA on 30 September
2021.
-- AuMA as at close of business on 14 November 2022 were GBP33.5 billion.
Net flows:
-- Net outflows for the six months ended 30 September 2022 of
GBP2.2 billion (2021: GBP2.1 billion inflows) .
Awards:
-- During the period first six months of our financial year, Liontrust won the following awards:
a. Liontrust won the Global Group of the Year award and
Liontrust European Dynamic Fund won the Best Europe ex UK Fund
award at Incisive Media's Fund Manager of the Year Awards
b. UK Smaller Companies Fund won the award for the best UK
Smaller Companies - Active fund at the AJ Bell Fund and Investment
Trust Awards
c. Liontrust won Best UK Manager of the Year at the Financial
News Excellence in Institutional Fund Management Awards
(1) This is an Alternative Performance Measure, see note 2
below.
(2) Restated, see note 6 below .
Commenting on the results, John Ions, Chief Executive, said:
"As guardians of our investors' savings, we take this
responsibility very seriously. This is particularly important given
the current cost of living crisis and the volatility we have seen
in investment markets.
While we expect this volatility to continue, the Liontrust
business remains in good health. The company is financially strong,
investment processes are robust, the brand profile is high and
positive, and there is extensive client engagement.
The strength of the company is demonstrated by the further
independent recognition that Liontrust has gained through awards,
including recently being voted Best UK Manager at the Financial
News' Excellence in Fund Management Awards 2022 .
The Board's confidence in the outlook for the business is shown
by the fact that Liontrust is maintaining the same Interim dividend
payment as last year at 22p. "
For further information please contact:
Tulchan Communications (Tel: 020 7353 4200, Email:
liontrust@tulchangroup.com)
Tom Murray or Stephanie Mackrell
Liontrust Asset Management Plc (Tel: 020 7412 1700, Website:
liontrust.co.uk)
John Ions: Chief Executive
Vinay Abrol: Chief Financial Officer & Chief Operating
Officer
Simon Hildrey: Chief Marketing Officer
David Boyle: Head of Corporate Development
Singer Capital Markets (Tel: 020 7496 3000)
Corporate Broking: Tom Salvesen
Corporate Finance: Justin McKeegan
Panmure Gordon (Tel: 020 7886 2500)
Corporate Broking: Charles Leigh-Pemberton
Corporate Advisory: Dominic Morley
Chief Executive's Statement
The excellence of our investment management teams, brand,
communications and distribution have been central to the success of
Liontrust over the past few years. These strengths will stand us in
good stead in both the current challenging environment and to drive
growth over the long term.
We have seen the impact of macro-economic events in the UK and
globally on asset management sales this year, and Liontrust has not
been immune to this. The industry trend in the UK has continued in
the third quarter of 2022.
I believe our strategy will enable us to emerge from the current
environment in a strong position within the UK asset management
industry and to develop our business successfully by meeting the
demands and needs of investors.
Consolidation in the asset management industry will continue,
and acquisitions remain a key part of meeting our strategic
objective of expanding Liontrust's distribution and products to
diversify our business. Consolidation presents opportunities for
Liontrust to buy businesses that have not achieved the required
brand profile and breadth of distribution to prosper, even when
they have strong investment management capability.
In acquiring companies where there is the opportunity to improve
their business performance, we can integrate them into our proven
business model to provide their investment teams with a strong
sales and marketing platform. In turn, they can broaden our product
range, enhance our investment proposition and therefore further
diversify Liontrust's distribution.
The acquisition of Majedie Asset Management has enhanced our
product range through the long/short equity fund Tortoise and
Edinburgh Investment Trust, as well as enabling us to meet the
strategic objectives of enhancing our institutional distribution
capability and acquiring talent. Tortoise has added to Liontrust's
other alternative investment funds - GF European Strategic Equity
and the MA Diversified Real Assets funds - for which there is
increasing demand especially in Europe.
Diversifying our distribution internationally will play a key
role in delivering future growth for Liontrust, both in Europe and
beyond. A broader fund range and product mix, including
alternatives, and increasing our number of strategic partners will
help drive this.
In doing so, we will remain focused on the quality of our
investment teams and funds. Central to our strategy has always been
to have expertise in all the areas of investment we offer and for
each team to have robust and repeatable processes. This will not
change.
The benefit of this approach is demonstrated by strong long-term
fund performance and the fact that research shows the Liontrust
Sustainable Investment and Economic Advantage teams are regarded as
leaders in their respective asset classes among both professional
intermediaries and retail investors in the UK (Source: Research in
Finance).
This is one part of delivering another of our strategic
objectives of enhancing the investor experience. I am pleased that
despite the general negative investor sentiment, Liontrust has been
able to maintain strong communication and engagement with our
clients. This is shown by the fact that more than 900 professional
investors registered for Liontrust's virtual Sustainable investment
conference held on 9 November, which is over 20% higher than two
years ago.
The evidence of the success of our focus on investment
management and client service has also been demonstrated by gaining
further independent recognition through Liontrust winning the award
for Best UK Manager of the Year at the Financial News' Excellence
in Fund Management Awards 2022 in November. Given Financial News'
focus on institutional investment, this shows the degree to which
we have been able to diversify over the past few years.
I am confident that a clear focus on our strategy will ensure
Liontrust continues to enhance our investment capability, broaden
distribution and strengthen the brand profile. This will enable
Liontrust to deliver for investors and shareholders over the long
term.
Chair's Statement
At a time of what feels like continuous political, economic and
market instability, it is imperative that your Company remains
focused on the long-term interests of our clients, colleagues and
you as shareholders. It is easy to lose focus in such an
environment and chase returns or a different strategy.
We must, and we do, challenge ourselves as to whether our
strategy is the correct one and is being implemented as effectively
as possible. We remain steadfast in our belief that both continue
to be true. In the Chief Executive's Statement, John Ions explains
how the strategy is being delivered despite the challenging
environment this year.
The acquisition of Majedie Asset Management has been impacted by
global events and their effect on investment markets, which we
could not foresee at the time of purchase. Buying Majedie was
consistent with the strategy of continuing to diversify our
investment management and distribution capability. This leads to a
more robust and resilient business over the long term as we have
proved with Liontrust's other acquisitions over the last
decade.
It is this track record and the excellent management of the
business that has led to Liontrust's growth and strong financial
health. On behalf of the Board, I want to thank the whole Liontrust
team for their hard work, commitment and adaptability to have kept
on strategically expanding and enhancing the Company over the past
few years whatever the external demands and challenges.
The UK's Financial Conduct Authority (FCA) has rightly increased
the focus on the treatment of and communication with investors with
two important pieces of regulations. Liontrust is well positioned
to meet the demands posed by the Consumer Duty and the consultation
paper on Sustainability Disclosure Requirements (SDR). The Company
has always had a strong focus on delivering clear and frequent
communications, engaging with consumers as well as institutional
and professional investors, and will continue to ensure we meet the
needs of retail investors going forward.
When it comes to SDR, our Sustainable Investment team has one of
the longest track records in the market at more than 21 years and
we are being transparent about the role of ESG in our other teams'
investment processes. This includes detailing the impact of our
funds' engagement with companies on behalf of investors. Concerns
about greenwashing have been rising and we support efforts to
ensure this is called out.
These new regulations are just one demonstration of why we
believe that Liontrust's strategy and focus on positive outcomes
for investors continue to put your Company in a strong position for
future growth.
Results
Liontrust has delivered profit before tax of GBP14.066 million
(2021: GBP31.063 million), a decrease of 55% compared to the
equivalent period last year. This includes costs of GBP28.8 million
(2021: GBP8.1 million) relating to recent acquisitions and
associated restructuring costs; the amortisation and impairment of
the related intangible assets; and other non-cash and non-recurring
costs (see note 6 below).
The adjusted profit before tax was GBP42.867 million (2021:
GBP39.256 million), an increase of 10%. Adjusted profit before tax
is disclosed in order to give shareholders an indication of the
profitability of the Group excluding non-cash expenses (intangible
asset amortisation and impairment), and non-recurring expenses
(acquisition related and associated restructuring and severance
compensation related).
See note 6 below for a reconciliation of adjusted profit before
tax.
Dividend
In accordance with the Company's dividend policy, the Board is
declaring a first Interim dividend of 22.0 pence per share (2021:
22.0 pence) which will be payable on 13 January 2023 to
shareholders who are on the register as at 9 December 2022, the
shares going ex-dividend on 8 December 2022. Last day for Dividend
Reinvestment Plan elections is 23 December 2022.
Shareholder services
With effect from Monday 14 November 2022, the Company has
transferred the management of its share register from Link Group to
Equiniti Limited (" EQ "). EQ's contact details are Equiniti
Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA.
Telephone: 0371 384 2030 (please use the country code if calling
from outside the UK, lines are open 8:30am to 5:30pm (UK time)
Monday to Friday (excluding public holidays in England and
Wales)).
Outlook
Despite the challenging year so far, we are optimistic about the
future growth of the Company. The confidence is based on the fact
the business is financially strong, we have robust investment
processes, we have been diversifying our investment capability and
distribution, and the brand profile continues to be positive and
strong. This belief is reflected in the Interim dividend payment we
have announced.
Assets under management and advice
On 30 September 2022, our AuMA stood at GBP31,695 million and
were broken down by type and investment process as follows:
Process Total Institutional Investment UK Retail Alternative International
Accounts Trusts Funds Funds Funds
& Funds & MPS & Accounts
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
Sustainable
Investment 11,005 323 - 10,049 - 633
Economic Advantage 7,577 417 - 6,909 - 251
Multi-Asset 5,893 - - 5,546 347 -
Global Equity 1,163 62 - 1,101 - -
Global Innovation 535 - - 535 - -
Cashflow Solution 989 517 - 354 112 6
Global Fundamental 4,089 1,347 1,059 1,086 451 146
Global Fixed
Income 444 - - 166 - 278
Total - 30
Sep 2022 31,695 2,666 1,059 25,746 910 1,314
AuMA as at 14 November 2022 were GBP33,461 million.
Net Flows
The net outflows over the six months to 30 September 2022 were
GBP2,187 million (30 September 2021: net inflows GBP2,088 million).
A reconciliation of fund flows and AuMA over the six months to 30
September 2022 is as follows:
Institutional Investment UK Retail Alternative International
Accounts Trusts Funds Funds Funds
Total & Funds & MPS & Accounts
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
Opening AuMA
- 1 Apr 2022 33,548 1,408 - 30,113 370 1,657
Net flows (2,187) (580) - (1,339) 172 (440)
Market and Investment
performance (4,814) (473) (180) (3,906) (27) (228)
Majedie acquisition 5,148 2,311 1,239 878 395 325
Closing AuMA
- 30 Sep 2022 31,695 2,666 1,059 25,746 910 1,314
UK Retail Fund Performance (Quartile ranking)
Quartile Quartile Quartile Quartile Launch
ranking - ranking ranking ranking Date/ Manager
Since Launch/Manager - 5 year - 3 year - 1 year Appointed
Appointed
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Economic Advantage funds
-----------------------------------------------------------------------------------------------------------
Liontrust UK Growth
Fund 1 1 1 1 25/03/2009
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Liontrust Special
Situations Fund 1 1 1 3 10/11/2005
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Liontrust UK Smaller
Companies Fund 1 1 1 1 08/01/1998
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Liontrust UK Micro
Cap Fund 1 1 1 1 09/03/2016
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Sustainable Future funds
-----------------------------------------------------------------------------------------------------------
Liontrust SF Monthly
Income Bond Fund 2 3 2 3 12/07/2010
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Liontrust SF Managed
Growth Fund 2 1 1 4 19/02/2001
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Liontrust SF Corporate
Bond Fund 3 4 4 4 20/08/2012
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Liontrust SF Cautious
Managed Fund 1 2 4 4 23/07/2014
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Liontrust SF Defensive
Managed Fund 1 2 3 4 23/07/2014
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Liontrust SF European
Growth Fund 2 4 4 4 19/02/2001
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Liontrust SF Global
Growth Fund 3 1 1 4 19/02/2001
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Liontrust SF Managed
Fund 1 1 1 4 19/02/2001
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Liontrust UK Ethical
Fund 2 2 4 4 01/12/2000
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Liontrust SF UK Growth
Fund 2 3 4 4 19/02/2001
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Global Innovation funds
-----------------------------------------------------------------------------------------------------------
Liontrust Global
Dividend Fund 2 1 1 4 20/12/2012
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Liontrust Global
Innovation Fund 1 3 3 4 31/12/2001
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Global Equity funds(1)
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Liontrust Balanced
Fund 1 1 1 4 31/12/1998
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Liontrust China Fund 4 4 3 4 31/12/2004
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Liontrust Emerging
Market Fund 2 4 3 3 30/09/2008
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Liontrust Global
Smaller Companies
Fund 1 1 2 4 01/07/2016
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Liontrust Global
Alpha Fund 1 1 1 4 31/12/2001
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Liontrust Global
Technology Fund 3 2 2 3 15/12/2015
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Liontrust India Fund 4 4 1 3 29/12/2006
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Liontrust Japan Equity
Fund 2 2 1 1 22/06/2015
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Liontrust Latin America
Fund 2 2 3 4 03/12/2007
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Cashflow Solution funds
---------------------------------------------------------------------------- ---------- -----------------
Liontrust European
Dynamic Fund(2) 1 1 1 1 15/11/2006
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Global Fixed Income
funds
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Liontrust Strategic
Bond Fund 2 - 3 2 08/05/2018
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Global Fundamental
Team funds(3)
---------------------------- ---------------------- ---------- ---------- ---------- -----------------
Liontrust UK Equity
Fund 1 4 3 3 27/03/2003
---------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust UK Focus
Fund 1 4 4 4 29/09/2003
---------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust Income
Fund 1 1 2 1 31/12/2002
---------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust UK Equity
Income Fund 2 4 4 4 19/12/2011
---------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust US Opportunities
Fund 1 1 2 3 31/12/2002
---------------------------- ---------------------- ---------- ---------- ---------- ---------------
Edinburgh Investment
Trust Plc(4) 2 - - 1 27/03/2020
---------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust Global
Equity Fund 1 1 1 1 30/06/2014
---------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust Global
Focus Fund 1 1 1 1 30/06/2014
---------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust GF US Equity
Fund 3 3 3 3 26/06/2014
---------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust GF UK Equity
Fund 4 4 3 3 03/03/2014
---------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust GF International
Equity Fund 3 - - 4 17/12/2019
---------------------------- ---------------------- ---------- ---------- ---------- ---------------
Source: Financial Express to 30 September 2022 as at 06 October
2022, bid-bid, total return, net of fees , based on primary share
classes. Edinburgh Investment Trust Plc NAV source: Morningstar.
Past performance is not a guide to future performance, investments
can result in total loss of capital. The above funds are all UK
authorised unit trusts, OEICs, or Irish authorised OEICs (primary
share class).
(1) Liontrust Russia Fund is not included as it is currently
suspended and in an IA sector that is not rankable (e.g.,
Specialist) so it would not be a fair comparison to make.
(2) Liontrust European Growth Fund changed its name to Liontrust
European Dynamic Fund on 11 July 2022.
(3) The onshore and offshore Tortoise funds are not included as
they are not in IA sectors.
(4) Edinburgh Investment Trust Plc uses the IT UK Equity Income
sector.
Alastair Barbour
Non-executive Chair
Consolidated Statement of Comprehensive
Income
Six months ended 30 September
2022
Six Six Year
months to months to ended
30-Sep-22 30-Sep-21 31-Mar-22
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
Revenue 4 116,785 114,893 245,571
Cost of sales 4 (7,984) (6,348) (14,252)
------------------------------- --------- -------------------------------------- ------------------------------------ ------------------------------------
Gross profit 108,801 108,545 231,319
Realised profit on sale of
financial assets - 50 -
Unrealised gain on financial
assets 465 - 26
Administration expenses 5 (95,204) (77,486) (151,916)
------------------------------- --------- -------------------------------------- ------------------------------------ ------------------------------------
Operating profit 14,062 31,109 79,429
Interest receivable 45 3 4
Interest payable (41) (49) (142)
------------------------------- --------- -------------------------------------- ------------------------------------ ------------------------------------
Profit before tax 14,066 31,063 79,291
Taxation 7 (1,290) (4,852) (20,088)
------------------------------- --------- -------------------------------------- ------------------------------------ ------------------------------------
Profit for the period 12,776 26,211 59,203
Other comprehensive income - - -
Total comprehensive income 12,776 26,211 59,203
=============================== ========= ====================================== ==================================== ====================================
Pence Pence Pence
------------------------------- --------- -------------------------------------- ------------------------------------ ------------------------------------
Basic earnings per share 8 19.93 43.27 97.65
Diluted earnings per share 8 19.82 42.72 96.61
------------------------------- --------- -------------------------------------- ------------------------------------ ------------------------------------
All of the results are derived from continuing operations.
The accompanying notes form an integral part of these unaudited condensed
interim financial statements.
Consolidated
Balance
Sheet
As at 30 September
2022
30-Sep-22 30-Sep-21 31-Mar-22
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
Assets
Non current assets
Intangible assets 9 97,648 79,992 75,171
Goodwill 10 38,584 27,577 27,577
Property, plant and
equipment 5,115 5,346 3,658
Total non current
assets 141,347 112,915 106,406
------------------------- -------- --------------------- -------------------------- ------------------------------------
Current assets
Trade and other
receivables 12 218,612 240,935 235,496
Financial assets 13 8,461 4,107 4,168
Cash and cash
equivalents 109,012 82,837 120,852
------------------------- --------
Total current assets 336,085 327,879 360,516
------------------------- -------- --------------------- -------------------------- ------------------------------------
Liabilities
Non current
liabilities
Deferred tax liability (21,425) (12,467) (16,601)
Lease liability (4,269) (5,024) (2,775)
Total non current
liabilities (25,694) (17,491) (19,376)
------------------------- -------- --------------------- -------------------------- ------------------------------------
Current liabilities
Trade and other payables (232,702) (252,314) (255,669)
Corporation tax payable (9,508) (1,853) (7,709)
Total current
liabilities (242,210) (254,167) (263,378)
------------------------- -------- --------------------- -------------------------- ------------------------------------
Net current assets 93,875 73,712 97,138
------------------------- -------- --------------------- -------------------------- ------------------------------------
Net assets 209,528 169,136 184,168
========================= ======== ===================== ========================== ====================================
Shareholders' equity
Ordinary shares 647 611 612
Share premium 112,510 64,370 64,370
Capital redemption
reserve 19 19 19
Retained earnings 107,907 109,626 128,859
Own shares held (11,555) (5,490) (9,692)
Total equity 209,528 169,136 184,168
========================= ======== ===================== ========================== ====================================
The accompanying notes form an integral part of these
unaudited condensed interim financial statements.
The unaudited condensed interim financial statements
were approved by the Board of Directors on 17 November
2022 and signed on their behalf by: Vinay Abrol
Consolidated Cash Flow Statement
Six months ended 30 September
2022
Six Six Year
months
months to to ended
30-Sep-22 30-Sep-21 31-Mar-22
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Cash inflow from operations 109,827 114,775 219,544
Cash outflow from operations (91,314) (71,972) (112,949)
Cash (outflow)/inflow from changes
in unit trust receivables and
payables (1,659) 1,453 (508)
----------------------------------------- ------------ ------------ ----------
Net cash generated from operations 16,854 44,256 106,087
Interest received 45 3 4
Tax paid (2,616) (7,500) (12,500)
------------ ------------ ----------
Net cash from operating activities 14,283 36,759 93,591
----------------------------------------- ------------ ------------ ----------
Cash flows from investing activities
Purchase of property, plant and
equipment (135) (310) (507)
Acquisition of Majedie net of
cash acquired 13,598 - -
Purchase of financial assets (2,701) (3,124) (3,125)
Sale of financial assets - - 1,183
Purchase of seeding investments (88) (34) (170)
Sale of seeding investments 270 - 84
------------ ------------ ----------
Net cash from/(used in) investing
activities 10,944 (3,468) (2,535)
----------------------------------------- ------------ ------------ ----------
Cash flows from financing activities
Payment of lease liabilities (817) (839) (1,889)
Purchase of own shares (4,250) - (5,000)
Sale of own shares - 328 -
Dividends paid (32,000) (21,841) (35,213)
---------------------------------------- ------------ ------------ ----------
Net cash used in financing activities (37,067) (22,352) (42,102)
Net (decrease)/ increase in cash
and cash equivalents (11,840) 10,939 48,954
Opening cash and cash equivalents 120,852 71,898 71,898
Closing cash and cash equivalents 109,012 82,837 120,852
========================================= ============ ============ ==========
Cash and cash equivalents consist only of cash balances.
Consolidated
Statement
of Change in
Equity
(unaudited)
Six months
ended
30 September
2022
Share Share Capital Retained Own shares Total
capital premium redemption earnings held Equity
GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP '000
Balance at 1
April
2022 brought
forward 612 64,370 19 128,859 (9,692) 184,168
Profit for the
period - - - 12,776 - 12,776
---------------- ----------------------- ----------------------- ----------------------- ----------------------- ----------------------- -----------------------
Total
comprehensive
income for the
period - - - 12,776 - 12,776
Dividends paid - - - (32,000) - (32,000)
Shares issued 35 48,140 - - - 48,175
purchase of own
shares - - - - (4,250) (4,250)
Equity share
options
issued - - - 964 - 964
LTIP dividends
settled
through
equity (305) (305)
Sale of own
shares - - - (2,387) 2,387 -
Balance at 30
September
2022 647 112,510 19 107,907 (11,555) 209,528
================ ======================= ======================= ======================= ======================= ======================= =======================
Consolidated
Statement
of Change in
Equity
(unaudited)
Six months
ended
30 September
2021
Share Share Capital Retained Own shares Total
capital premium redemption earnings held Equity
GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP '000
Balance at 1
April
2021 brought
forward 610 64,370 19 104,207 (5,818) 163,388
Profit for the
period - - - 26,211 - 26,211
---------------- ----------------------- ----------------------- ----------------------- ----------------------- ----------------------- -----------------------
Total
comprehensive
income for the
period - - - 26,211 - 26,211
Dividends paid - - - (21,841) - (21,841)
Shares issued 1 - - (1) - -
Sale of own
shares - - - - 328 328
Equity share
options
issued - - - 1,541 - 1,541
Equity share
options
issued settled - - - (244) - (244)
Deferred tax on
option
charge taken
to equity - - - (247) - (247)
Balance at 30
September
2021 611 64,370 19 109,626 (5,490) 169,136
================ ======================= ======================= ======================= ======================= ======================= =======================
Consolidated
Statement of
Change in
Equity
(audited)
Year ended 31
March 2022
Ordinary Share Capital Retained Own shares Total
shares premium redemption earnings held Equity
GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP '000
Balance at 1
April 2021
brought
forward 610 64,370 19 104,207 (5,818) 163,388
Profit for the
year - - - 59,203 - 59,203
Total
comprehensive
income for the
year - - - 59,203 - 59,203
Dividends paid - - - (35,947) - (35,947)
Shares issued 2 - - (2) - -
Purchase of own
shares - - - - (5,000) (5,000)
Sale of own
shares - - - (1,042) 1,126 84
Equity share
options issued - - - 2,440 - 2,440
Balance at 31
March 2022 612 64,370 19 128,859 (9,692) 184,168
======================= ======================= ======================= ======================= ======================= =======================
The accompanying notes form an integral part of these unaudited
condensed interim financial statements.
Notes to the Financial statements
1 Principal Accounting Policies
a) Basis of preparation
The Group financial information for the six months ended 30
September 2022 has been prepared in accordance with the Disclosure
Guidance and Transparency Rules of the Financial Conduct Authority
and with IAS 34 Interim Financial Reporting. The condensed interim
financial statements should be read in conjunction with the Group's
annual financial statements for the year ended 31 March 2022, which
were prepared in accordance with UK-adopted international financial
reporting standards (IFRS) and with the requirements of the
Companies Act as applicable to companies reporting under those
standards.
The condensed financial statements do not comprise statutory
accounts within the meaning of section 434 of the Companies Act
2006. The financial information for the half years ended 30
September 2022 and 2021 has not been audited by the auditors
pursuant to the Auditing Practices Board guidance on Review of
Interim Financial Information. KPMG reported on the 31 March 2022
financial statements, and their report was unmodified and did not
contain a statement under Section 498(2) or (3) of the Companies
Act 2006 in the UK.
The preparation of financial statements in conformity with IFRS
requires the directors of the Company to make significant estimates
and judgements that affect the reported amounts of assets and
liabilities and disclosure of contingencies at the date of the
financial information and the reported income and expense during
the reporting periods. Although these judgements and assumptions
are based on the directors' best knowledge of the amount, events or
actions, actual results may differ from these estimates. The
accounting policies set out below have been used to prepare the
financial information. All accounting policies have been
consistently applied.
b) Going concern
The financial information presented within these financial
statements has been prepared on a going concern basis under the
historical cost convention (except for the measurement of financial
assets at fair value through profit and loss and DBVAP liability
which are held at their fair value). The Group is reliant on cash
generated by the business to fund its working capital. The
Directors have assessed the prospects of the Group and parent
company over the forthcoming 12 months, including an assessment of
current trading; budgets, plans and forecasts; the adequacy of
current financing arrangements; liquidity, cash reserves and
regulatory capital; and potential material risks to these forecasts
and the Group strategy. This assessment includes consideration of a
severe but plausible downside scenario in which AuMA falls due to a
market event by 20%. The Directors confirm that as a result of this
assessment they have a reasonable expectation that the Group and
parent company will continue to operate and meet its liabilities as
they fall due for at least 12 months from the date of signing these
accounts.
c) Accounting estimates and judgements
The preparation of the financial statements in conformity with
IFRS requires the use of certain critical accounting estimates. It
also requires management to exercise its judgement in the process
of applying the Group's accounting policies. Estimates and
judgements used in preparing the financial statements are
periodically evaluated and are based on historical experience and
other factors, including expectations of future events that are
believed to be reasonable. The resulting accounting estimates may
not equal the related actual results. There are no significant
judgements. The Directors make a number of estimates, these include
leases (note l in the financial statements for the year ended 31
March 2022) and share based payments (see notes l and q in the
financial statements for the year ended 31 March 2022), neither of
which are considered to be significant. In addition, the Directors
make significant estimates to support the carrying value of
goodwill and intangibles that arise on acquisition. These estimates
are set out below:
(i) Acquisition of Majedie Investment Management Limited:
The consideration paid for Majedie is allocated between the
intangible assets related to the fund management contracts,
segregated client portfolios and goodwill, being the excess of the
consideration and the amount recognised for non-controlling
interests, over the net identifiable assets acquired and
liabilities assumed. The significant estimate is in relation to
certain unobservable inputs supporting the carrying value of the
intangible assets and goodwill. Details of the key assumptions used
are provided in notes 9 and 10.
(ii) Impairment of Goodwill and Intangible assets
Goodwill arising on acquisitions is capitalised in the
consolidated balance sheet. Goodwill is carried at cost less
provision for impairment. The carrying value of goodwill is not
amortised but is tested annually for impairment or more frequently
if any indicators of impairment arise. Goodwill is allocated to a
cash generating unit (CGU) for the purpose of impairment testing,
with the allocation to those CGUs that are expected to benefit from
the business combination in which the goodwill arose (see note 14
of the Financial Statements to 31 March 2022).
The costs of acquiring intangible assets such as fund management
contracts are capitalised where it is probable that future economic
benefits that are attributable to the assets will flow to the Group
and the cost of the assets can be measured reliably. The assets are
held at cost less accumulated amortisation. An assessment is made
at each reporting date, on a standalone basis for each intangible
asset, as to whether there is any indication that the asset in use
may be impaired. If any such indication exists and the carrying
value exceeds the estimated recoverable amount at the time, the
assets are written down to their recoverable amount. The
recoverable amount is measured as the greater of fair value less
costs to sell and value in use. Further information on the
impairment testing and estimates used are contained in note 9.
The fund management contracts and segregated clients contracts
relating to the assets acquired as part of the acquisitions of
Alliance Trust Investments Limited; Neptune Investment Management
Limited; Architas Multi-Manager Limited and Architas Advisory
Services Limited (together "Architas") and Majedie Investment
Management Limited are recorded initially at fair value and
recorded in the consolidated financial statements as intangible
assets, they are then amortised over their useful lives on a
straight-line basis. Management have determined that the useful
life of these assets is between 5 and 10 years owing to the nature
of the acquired products. Impairment is tested through measuring
the recoverable amount against the carrying value of the related
intangible asset. The recoverable amount is the higher of the fair
value less costs to sell and its value in use. The Directors assess
the value in use using a multi-period excess earnings model which
requires a number of inputs requiring management estimates, the
most significant of which include: future AuMA growth, useful
economic life and discount rates. In the current period,
significant estimates were only required for the intangible assets
in relation to Architas and Majedie (see notes 9 and 10 for further
detail).
Impairment losses on goodwill, where these are identified, are
not reversed. Impairment is tested through measuring the
recoverable amount against the carrying value of the related
goodwill. The recoverable amount is the higher of the fair value
less costs to sell the CGU and its value in use. Value in use is
assessed using a multi-period excess earnings model which requires
a number of inputs requiring management estimates and judgements,
the most significant of which are: future new business, AuMA
growth, discount rates and terminal growth rate.
In the current period, significant estimates were only required
to be reassessed for the goodwill assets in relation to Architas
and Majedie (see notes 9 and 10 for further details). Due to the
strong performance and growth of the Sustainable Investment team
(acquired as part of the ATI acquisition) and the Global Equity
team (acquired as part of the Neptune acquisition) since
acquisition there is no significant estimation in relation to the
impairment of the related goodwill allocated to the Sustainable and
Global Equity Investment teams' CGU.
2 Alternative Performance Measures ("APMs")
ADJUSTED PROFIT BEFORE TAX
Definition: Profit before taxation, amortisation and impairment,
and non-recurring items (which include: professional fees relating
to acquisitions; restructuring and severance compensation related
costs).
Reconciliation: Note 6.
Reason for use: This is used to present a measure of
profitability of the Group which is aligned to the requirements of
shareholders, potential shareholders and financial analysts, and
which removes the effects of non-cash and non-recurring items,
which eases the comparison with the Group's competitors who may use
different accounting policies and financing methods.
Specifically, calculation of Adjusted profit before tax excludes
amortisation expenses, and costs associated with acquisitions and
their integration into the Group. It provides shareholders,
potential shareholders and financial analysts a consistent year on
year basis of comparison of a "profit before tax number", when
comparing the current year to the previous year and also when
comparing multiple historical years to the current year, of how the
underlying ongoing business is performing.
ADJUSTED OPERATING PROFIT
Definition: Operating profit before interest and amortisation
and impairment, and non-recurring items (which include:
professional fees relating to acquisitions; restructuring and
severance compensation related costs).
Reconciliation: Note 6.
Reason for use : This is used to present a measure of
profitability of the Group which is aligned to the requirements of
shareholders, potential shareholders and financial analysts, and
which removes the effects of financing and capital investment,
which eases the comparison with the Group's
competitors who may use different accounting policies and
financing methods.
Specifically, calculation of Adjusted operating profit before
tax excludes amortisation expenses, and costs associated with
acquisitions and their integration into the Group. It provides
shareholders, potential shareholders and financial analysts a
consistent year on year basis of comparison of a "operating
profit", when comparing the current year to the previous year and
also when comparing multiple historical years to the current year,
of how the underlying business is performing
ADJUSTED OPERATING MARGIN
Definition: Adjusted operating profit divided by Gross
profit.
Reconciliation: Note 6.
Reason for use: This is used to present a consistent year on
year measure of adjusted operating profit compared to gross
profits, identifying the operating gearing within the business.
GROSS PROFIT EXCLUDING PERFORMANCE FEES
Definition: Gross profit less any revenue attributable to
performance related fees.
Reconciliation: Note 4
Reason for use: This is used to present a consistent year on
year measure of gross profits within the business, removing the
element of revenue that may fluctuate significantly
year-on-year.
ADJUSTED EARNINGS PER SHARE
Definition: Adjusted profit before tax divided by the weighted
average number of shares in issue.
Reconciliation: Note 6
Reason for use: This is used to present a measure of
profitability per share in line with the adjusted profit as
detailed above.
ADJUSTED DILUTED EARNINGS PER SHARE
Definition: Adjusted profit before tax divided by the diluted
weighted average number of shares in issue.
Reconciliation: Note 6.
Reason for use: This is used to present a measure of
profitability per share in line with the adjusted profit as
detailed above
OTHER ADMINISTRATION EXPENSE
Definition: a component of administration expenses related to
non-people related costs within the business.
Reconciliation: Note 5
3 Segmental Reporting
The Group 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.
4 Revenue
Six Six Year
months
to months to ended
30-Sep-22 30-Sep-21 31-Mar-22
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Revenue
- Revenue * 116,785 114,893 232,976
- Performance fee revenue - - 12,595
------------------------------------- ------------ ------------ ----------
Total Revenue 116,785 114,893 245,571
------------------------------------- ------------ ------------ ----------
Cost of sales * (7,984) (6,348) (14,252)
Gross Profit 108,801 108,545 231,319
===================================== ============ ============ ==========
* Revenue from earnings includes:
- Investment management on unit trusts, open-ended investment
companies sub-funds, portfolios and segregated account.
- Performance fees on unit trusts, open-ended investment
companies sub-funds, portfolios and segregated accounts.
- Fixed administration fees on unit trusts and open-ended
investment companies sub-funds.
- Net value of sales and repurchases of units in unit
trusts and shares in open-ended investment companies (net
of discounts).
- Net value of liquidations and creations of units in
unit trusts and shares in open-ended investment companies
sub-fund.
- Box profits on unit trusts - the "at risk" trading profit
or loss arising from changes in the valuation of holdings
of units in Group Unit Trusts to help manage client sales
into, and redemptions from the trust.
- Foreign currency gains and losses.
- Less contractual rebates paid to customers.
The cost of sales includes:
- Operating expenses including (but not limited to) keeping
a record of investor holdings, paying income, sending
annual and interim reports, valuing fund assets and calculating
prices, maintaining fund accounting records, depositary
and trustee oversight and auditors.
- Sales commission paid or
payable to third parties.
- External investment advisory
fees paid or payable.
5 Administration expenses
Six Six Year
months to months to ended
30-Sep-22 30-Sep-21 31-Mar-22
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Employee related expenses
Wages and salaries 13,541 20,060 35,221
Social security costs 1,912 2,864 4,539
Pension costs 1,176 866 1,745
Share incentivisation expense 1,304 2,974 3,446
DBVAP expense 1,263 1,344 2,405
Severance compensation 3,522 4 704
22,718 28,112 48,060
Non-employee related expenses
Members' drawings charged as
an expense 24,549 24,314 54,639
Members' share incentivisation
expense 228 971 1,257
Members' severance 35 114 -
Professional services(1) 4,654 3,255 6,920
Depreciation 970 959 2,474
Intangible asset amortisation
and impairment 20,590 4,820 9,641
Other administration expenses 21,460 14,941 28,925
---------------- ---------------- -------------
Total administration expenses 95,204 77,486 151,916
=========================================== ================ ================ =============
(1) Includes acquisition related and restructuring costs for Architas/Neptune/Majedie.
6 Adjusted Profit before tax
Adjusted profit before tax is reconciled in the table below:
Six Six Year
months
months to to ended
30-Sep-22 30-Sep-21 31-Mar-22
(restated
(unaudited) unaudited) (audited)
GBP'000 GBP'000 GBP'000
Profit before tax for the period 14,066 31,063 79,291
Severance compensation and staff
reorganisation costs 3,557 118 704
Professional services(2) 4,654 3,255 6,920
Intangible asset amortisation and
impairment 20,590 4,820 9,641
Adjustments 28,801 8,193 17,265
------------------------------------- ------------ -------------------------------------- ----------
Adjusted profit before tax 42,867 39,256 96,556
------------------------------------- ------------ -------------------------------------- ----------
Interest receivable (45) (3) (4)
Interest payable - - -
Adjusted operating profit 42,822 39,253 96,552
------------------------------------- ------------ -------------------------------------- ----------
Adjusted operating margin 39.4% 36.2% 41.7%
------------------------------------- ------------ -------------------------------------- ----------
Adjusted basic earnings per share 54.17 52.50 129.00
Adjusted diluted earnings per share 53.87 51.82 127.63
------------------------------------- ------------ -------------------------------------- ----------
(2) Includes acquisition related and restructuring costs for Architas/Neptune/Majedie.
Following the change in calculation methodology the Adjusted profit
reconciliation for the half year ended 30 September 2021 has been
represented under the new methodology which shows what the adjusted
profit would have been in the prior half year period.
7 Taxation
The half yearly tax charge has been calculated at the estimated
full year effective UK corporation tax rate of 19% (2021: 19%).
8 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 as shown in the table below. 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 2022 as shown in the table below. This is reconciled
to the actual weighted number of Ordinary Shares as follows:
30-Sep-22 30-Sep-21 31-Mar-22
Weighted average number
of Ordinary shares 64,099,257 60,570,438 60,628,715
Weighted average number
of dilutive Ordinary shares
under option:
- to Liontrust Long Term
Incentive Plan 352,420 757,386 625,902
- to the Liontrust CSOP 2,500 28,419 22,863
Diluted weighted average
number of Ordinary Shares 64,454,177 61,356,243 61,277,480
============================== ============== ============= ===========
9 Intangible assets
Intangible assets represent investment management contracts and
segregated client contracts that have been capitalised upon
acquisition and are amortised on a straight-line basis over a
period of their useful economic life. The intangible asset on the
balance sheet represents investment management contracts as
follows:
30-Sep-22 30-Sep-21 31-Mar-22
GBP'000 GBP'000 GBP'000
Investment management contracts acquired
from ATI 5,400 6,600 6,000
Investment management contracts acquired
from Neptune 21,196 24,224 22,710
Investment management contracts acquired
from Architas 34,955 49,168 46,461
Investment management contracts acquired
from Majedie(3) 20,087 - -
Segregated client contracts acquired
from Majedie(3) 16,010 - -
97,648 79,992 75,171
========== ========== ==========
(3) See note 11 below for further information.
Impairment of intangible assets
Architas
Indicators of impairment were identified for the Architas
investment management contract intangible asset due to higher than
expected fund outflows and negative market returns leading to
forecast revenues being lower than originally forecast. The value
of the intangible assets have therefore been retested as at 30
September 2022 which has resulted in an impairment of the Architas
investment management contract intangible of GBP8.800 million.
Majedie
Indicators of impairment were identified for the Majedie
investment management contracts and segregated clients intangible
assets as at 30 September 2022 due to the current macroeconomic and
geopolitical climate and its resultant impact on outflows. The
value of the intangible assets have therefore been retested as at
30 September 2022 which has resulted in an impairment of the
Majedie investment management contract intangible of GBP4.016
million.
Impairment losses are recognised in the statement of
comprehensive income in amortisation:
Architas Majedie Total
Intangible assets impaired GBP'000 GBP'000 GBP'000
in the period
Intangible asset at 1 April
2022 46,461 43,067 89,528
Amortisation (2,706) (2,954) (5,660)
Impairment loss - investment
management contracts (8,800) (4,016) (12,816)
--------- -------- ---------
Intangible asset at 30 September
2022 34,955 36,097 71,052
--------- -------- ---------
Discount rate 12.4% 11.4%
The discount rate used in the intangible models was a market
participant weighted average cost of capital, determined using the
capital asset pricing model (post-tax) and calibrated using current
assessments of market equity risk premia, company risk / beta,
small company premium, tax rates and gearing; and specific risk
premium for the relevant intangible asset. The appropriate discount
rate is appraised at the date of the relevant transaction and then
also at the reporting date to enable impairment reviews and
testing.
Other key assumptions include AuMA growth and useful economic
life. Sensitivity analysis was carried out on this model to reduce
the AuMA growth rate by 1%. The value of the investment management
contracts under this reasonable scenario would be reduced by
GBP1.564 million. The segregated client contracts would not be
impaired under these scenarios.
10 Goodwill
Goodwill is allocated to the cash generating unit (CGU) to which
it relates as the underlying funds acquired in each business
acquisition are clearly identifiable to the ongoing investment team
that is managing them. The ATI Goodwill on acquisition is allocated
to the Sustainable Funds team CGU and at 30 September 2022 was
GBP11,874,000 (31 March 2022: GBP11,874,000). An assessment was
made in relation to impairment of the goodwill where the
recoverable amount, based on a value in use, was calculated using
an earnings model which used key assumptions such as the discount
rate (12.4%, 31 March 2022: 12.8%), terminal growth rate (2%, 31
March 2022: 2%) and net AuMA growth (5%, 2020: 5%). Sensitivity
analysis was carried out on this model which significantly reduced
the forecast net AuMA growth and increased the discount rate. These
changes in estimates would not lead to any impairment in the
carrying value of this goodwill.
The Neptune Goodwill on acquisition is allocated to the Global
Equities team CGU and at 30 September 2022 was GBP7,753,000 (31
March 2022: GBP7,753,000). At 30 September 2022 an assessment was
made in relation to impairment of the goodwill where the
recoverable amount, based on a value in use, was calculated using
an earnings model with reference to the projected cashflows
relating to the CGU over a period of 5 years, which used key
assumptions such as net AuMA growth, comprising net sales of GBP150
million and market growth rate (5%, 31 March 2022: 5%), terminal
growth rate (2%, 31 March 2022: 2%) and a discount rate (12.4%, 31
March 2022: 12.8%). Based on these reasonable estimates there was
no indication of impairment.
The Architas Goodwill on acquisition is allocated to the Multi
Asset team CGU and at 30 September 2022 was GBP7,951,000 (31 March
2022: GBP7,951,000). At 30 September 2022 an assessment was made in
relation to impairment of the goodwill where the recoverable
amount, based on a value in use, was calculated using an earnings
model with reference to the projected cashflows relating to the CGU
over a period of 5 years, which used key assumptions such as net
sales, net AuMA growth rates (4% per annum), terminal growth rate
(2%) and a discount rate of 12.4%. Based on this assessment there
was no indication of impairment.
Sensitivity analysis was carried out on this model which
included changing the discount rate and reducing the net AuMA
growth. The discount rate could be increased by 1.1% (10% increase
in rate) without impairing goodwill and resulted in a GBP9.9
million reduction in headroom. Net new business flows could be
reduced to nil without impacting goodwill and resulted in a GBP27.8
million reduction in headroom. However, reducing the AuMA growth to
nil would result in the carrying value of goodwill being fully
impaired. Management consider this to be a reasonably possible
scenario, however the five year modelling timeframe would give
ample time for management action. Given the significant headroom in
our base forecasts management have concluded that no impairment of
the goodwill is required. An assessment of the goodwill will be
reperformed at the financial year end.
The Majedie goodwill on acquisition is allocated to the Global
Fundamental team CGU and at 30 September 2022 was GBP11,006,000 (31
March 2022: GBPN/A). At 30 September 2022 an assessment was made in
relation to impairment of the goodwill where the recoverable
amount, based on a value in use, was calculated using an earnings
model with reference to the projected cashflows relating to the CGU
over a period of 5 years, which used key assumptions such net
sales, net AuMA growth rates (variable based on management
forecast), terminal growth rate (2%) and a discount rate of 11.4%.
Based on this assessment there was no indication of impairment.
Sensitivity analysis was carried out on this model which
included changing the discount rate and reducing the net AuMA
growth. The discount rate could be increased by 1.1% (10% increase
in rate) without impairing goodwill and resulted in a GBP6.1
million reduction in headroom. Net new business flows could be
reduced to nil without impacting goodwill and resulted in a GBP11.4
million reduction in headroom. However, reducing the fund net sales
to nil and market growth to -5.6% would result in the carrying
value of goodwill being fully impaired. Management consider this to
be a reasonably possible scenario, however the five year modelling
timeframe would give ample time for management action. Given the
significant headroom in our base forecasts management have
concluded that no impairment of the goodwill is required. An
assessment of the goodwill will be reperformed at the financial
year end.
GBP'000
ATI - Sustainable investment team 11,874
Neptune - Global Equity team 7,753
Architas - Multi-Asset team 7,951
Majedie - Global Fundamental team 11,006
38,584
==============================
11 Majedie acquisition
Acquisition of Majedie Asset Management
On 1 April 2022 the Company acquired the entire issued share
capital of Majedie Asset Management Limited ("Majedie") for a cost
of GBP54.060 million. The consideration was funded by an issue of
3,683,220 shares raising GBP48.175 million. The acquisition adds a
further highly regarded investment team and distinct investment
process, the Global Fundamental team; and provides broader
distribution and growth opportunities in our institutional and
investment trust business.
The goodwill of GBP11.006 million arising from the acquisition,
allocated to the Global Fundamental fund management team, is
attributable to the acquired funds, customers and segregated
accounts; and the expected economies of scale, growth opportunities
and efficiencies from combining the operations of Majedie with the
Group.
The total consideration was GBP54.060 million and is summarised
in the following table showing the fair value of assets and
liabilities acquired at completion:
GBP'000 GBP'000
Fair value of consideration payable:
Equity instruments (3,683,220 shares
issued on completion) 48,175
Cash(4) 4,036
Deferred consideration 1,849
---------
Total consideration 54,060
---------
Recognised amounts of identifiable assets
acquired and liabilities assumed:
Fixed assets 90
Cash 17,633
Trade and other receivables 10,650
Trade and other payables (17,974)
---------
Tangible assets acquired 10,399
Intangible assets - investment management
contracts 27,056
Intangible assets - segregated clients 16,010
---------
43,066
Deferred tax liability (10,411)
Goodwill 11,006
---------
Net assets acquired 54,060
---------
(4) Cash consideration payable for the excess of the net asset
value of Majedie at the completion date over GBP5.5 million.
Acquisition costs of GBP1.198 million and reorganisation costs
of GBP5.917 million have been charged to administrative expenses in
the consolidated statement of the comprehensive income for the
period to 30 September 2022.
Two further tranches of deferred consideration are payable
subject to conditions:
1. Performance fee consideration - a maximum of 538,674 shares
in Liontrust is payable if performance fee targets are met by 31
March 2025 subject to an AUM target at 31 March 2023. Management
consider that this AUM target will not be met and therefore NIL
consideration is expected to be paid.
2. Client consideration - a maximum of GBP20 million payable
subject to Liontrust being appointed as investment manager by a
specified client before 31 March 2023. The expected value of this
consideration, based on a probability weighted expected returns
model, is GBP1.849 million.
The identifiable assets acquired are accounted for at fair
value. The fair value of 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. Due to the different characteristics of fund
management contracts and segregated client relationships the
related intangible assets were modelled separately. The MPEEM model
assisted the Group in arriving at the valuation of GBP21.057
million for the fund management contracts and GBP16.010 million for
segregated client relationships which management believe is
appropriate.
The material accounting judgements used by management in the
MPEEM included the useful economic life of the assets (10 years for
funds, 5 years for segregated), the discount rate (12.7%), and net
AuMA growth rate (variable). A 1% increase/decrease in the discount
rate used would result in a decrease/increase in the value of the
fund intangible of GBP1.452 million and GBP1.636 million
respectively and segregated intangible of GBP0.447 million and
GBP0.477 million respectively; and a corresponding increase/
decrease in the value of goodwill of GBP1.438 million and GBP1.600
million. An increase/decrease in net AuMA growth of 1% would result
in an increase/decrease in the value of the funds intangible of
GBP2.041 million and GBP1.812 million respectively and segregated
intangible of +/-GBP0.002 million; and a corresponding
decrease/increase in the value of goodwill of GBP1.541 million and
GBP1.369 million respectively.
Goodwill on acquisition is allocated to the Global Fundamental
team cash generating unit ("CGU"), see note 10 for details. Testing
of the value of goodwill at 30 September 2022 does not indicate any
impairment.
12 Trade and other receivables
30-Sep-22 30-Sep-21 31-Mar-22
GBP'000 GBP'000 GBP'000
Trade receivables
- Fees receivable 19,325 22,703 29,989
- Unit Trust sales and
cancellations 190,656 211,316 200,754
Prepayments and accrued
income 8,631 6,916 4,753
218,612 240,935 235,496
============================ ============================ =============================
All financial assets listed above are non-interest bearing. The
carrying amount of these non-interest-bearing trade and other
receivables approximates their fair value. As at 30 September 2022,
trade receivables of GBPnil (2021: GBPnil) were past due but not
impaired. Expected credit losses are immaterial.
13 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:
- Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets and
liabilities;
- 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);
- 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.
Under IFRS9 all financial assets are categorised as Assets held
at fair value through profit and loss.
The financial assets consist of units held in the Group's
collective investment schemes as part of a 'manager's box, assets
held by the EBT in respect of the Liontrust DBVAP and assets held
in Liontrust Global Funds plc to assist administration. The
holdings are valued on a mid or bid basis.
14 Related Party transactions
During the six months to 30 September 2022 the Group received
fees from unit trusts and ICVCs under management of GBP102,678,000
(2021: GBP116,146,000). Transactions with these funds comprised
creations of GBP1,953,952,000 (2021: GBP3,980,800,000) and
liquidations of GBP2,878,294,000 (2021: GBP2,195,098,000). As at 30
September 2022 the Group owed the unit trusts GBP190,172,000 (2021:
GBP211,545,000) in respect of unit trust creations and was owed
GBP204,931,000 (2021: GBP231,108,000) in respect of unit trust
cancellations and fees.
During the six months to 30 September 2022 the Group received
fees from offshore funds under management of GBP3,869,000 (2021:
GBP5,655,000). Transactions with these funds comprised purchases of
GBP88,000 (2021: GBP34,000) and sales of GBP57,000 (2021: GBPnil).
As at 30 September 2022 the Group was owed GBP606,000 (2021:
GBP753,000) in respect of management fees.
Directors and management can invest in funds managed by the
Group on commercial terms that are no more favourable than those
available to staff in general.
15 Post balance sheet date event
There were no post balance sheet events.
16 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 2022 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 64 of the 2022
Annual Report and Note 2 "Financial risk management" on page 150 of
the 2022 Annual Report.
17 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 30
September 2022 has not been recognised in the results for the
period.
18 Directors' responsibilities
The Directors confirm that this condensed set of interim
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, being an indication of important events that have occurred
during the first six months of the current financial year and their
impact on the condensed set of financial statements; and a
description of the principal risks and uncertainties for the
remaining six months of the year; and DTR 4.2.8, being related
party transactions that have taken place in the first six months of
the current financial year and that have materially affected the
financial position or performance of the Group during that period;
and any changes in the related party transactions described in the
last Annual Report and Accounts that could have a material effect
on the financial position or performance of the Group in the past
six months of the current financial year .
By Order of the Board
John S. Ions Vinay K. Abrol
Chief Operating
Chief Executive Officer
and Chief Financial
Officer
17 November 2022
Forward Looking Statements
This Half 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 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
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END
IR BRBDBSBBDGDR
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