TIDMLIO
RNS Number : 3726G
Liontrust Asset Management PLC
25 November 2020
Embargoed until 0700 hours, Wednesday 25 November 2020
LIONTRUST ASSET MANAGEMENT PLC
HALF YEARLY REPORT FOR THE SIX MONTHSED
30 SEPTEMBER 2020
Liontrust Asset Management Plc ("Liontrust", the "Company", or
the "Group"), the independent fund management group, today
announces its Half Yearly Report for the six months ended 30
September 2020.
Results:
-- Adjusted profit before tax(1) of GBP22.3 million (2019:
GBP17.0 million), an increase of 31% compared to the equivalent
period last year
-- Profit before tax of GBP6.9 million (2019: GBP9.3 million), a
decrease of 26% compared to the equivalent period last year. This
includes costs of GBP15.4 million (2019: GBP7.7 million) relating
to acquisition related and associated restructuring costs; the
amortisation of the related intangible assets and other non-cash
and non-recurring costs (see note 6 below)
-- Gross profit of GBP63 million (2019: GBP46 million), an
increase of 37% compared to the equivalent period last year
Dividend:
-- First Interim dividend per share of 11.0 pence (2019: 9.0
pence), which will be payable on 8 January 2021, the shares going
ex-dividend on 3 December 2020, an increase of 22% compared to the
equivalent payment last year.
Assets under management and advice:
-- On 30 September 2020, assets under management and advice
("AuMA") were GBP20.6 billion, an increase of 28% since the start
of the financial year and 41% compared to AuMA on 30 September
2019
-- The acquisition of the Architas UK Investment Business
completed on 30 October 2020 adding GBP5.6 billion to AuMA
-- AuMA as at close of business on 20 November 2020 were GBP28.1
billion, which includes AuMA related to the acquisition of the
Architas UK Investment Business
(1) This is an Alternative Performance Measure, see note 2
below.
Inflows:
-- Net inflows for the six months ended 30 September 2020 of
GBP1,748 million (2019: GBP1,367 million), an increase of 28%
compared to the equivalent period last year
Commenting on the results, John Ions, Chief Executive, said:
"I am delighted the momentum of the strong first quarter has
continued through the half year.
It has been a challenging period for everyone. Covid-19
continues to affect all parts of the economic and social fabric of
the country and its effects will be felt for many years to come. I
have said before that the asset management industry has a vital
role to play in this recovery, from the provision of capital that
enables companies and the economy to grow to the equally important
role as guardians of people's savings to enable them to lead a
better future.
It is a testament to the quality of people at Liontrust, the
processes we have in place and our ability to deliver for clients
that we have been able to continue to generate such large inflows.
The scale of the achievement is shown by Liontrust continuing to
appear in the top 10 for retail sales in the UK. According to the
Pridham Report, Liontrust had the 6th highest net retail sales in
the UK and the 8th highest gross retail sales in the UK in the
third quarter of 2020.
Active fund management can continue to benefit investors by
meeting their expectations. The Liontrust Economic Advantage team
have been doing this for more than 20 years through their robust
and repeatable investment process, which is evidenced by long-term
fund performance.
Over the last 10 years, the Liontrust Special Situations Fund
has outperformed the FTSE All Share by 6.88% on an annualised basis
and the Liontrust UK Smaller Companies Fund has outperformed the
FTSE Small Cap ex ITs Index by 8.76%(2) .
Active managers have the opportunity to add value through
sustainable investment if they avoid greenwashing. At the heart of
any successful business are its clients, and ours are clearly
telling us they want their money to have a positive impact on
society and the world at large. To ensure Liontrust delivers this,
we are committed to pushing forward our levels of engagement to
produce the best possible outcomes for investors.
Over the past 10 years, the Liontrust SF UK Growth Fund has
outperformed the MSCI UK by 5.64% on an annualised basis and the
Liontrust SF Global Growth Fund has outperformed the MSCI World by
2.32%(2) .
This success is reflected in the independent recognition of
Liontrust and our investment teams. Harriet Parker was named ESG
Fund Manager of the Year at the Women in Finance Awards on 12
November 2020. On the same day, Liontrust won three categories at
the FTAdviser Investment Club Awards: Small to Mid Investment Group
of the year, UK Smaller Companies Fund of the year (Liontrust UK
Smaller Companies Fund) and Mixed Asset Fund of the year (Liontrust
SF Managed Growth Fund).
Sustainable investment is also providing asset managers with the
opportunity to connect with investors because of the strength of
the emotional interest in delivering a healthier, cleaner and safer
world that has been heightened by the pandemic.
The strength of the Liontrust brand, client relationships and
communications have helped grow the AuMA of the Sustainable
Investment team and ensure strong positive inflows for Liontrust as
a whole in 2020. We continually strive to ensure clients receive
the best possible service, and for this reason we are increasing
our spend on our digital capability.
On 30 October, we completed the acquisition of the Architas UK
Investment Business, adding GBP5.6 billion of AuMA, creating a
significant multi-asset multi-manager proposition and substantially
enhancing our distribution potential and service to financial
advisers. We have successfully integrated the investment team,
funds and the rest of the team into Liontrust, ensuring as seamless
a transition as possible for clients.
This acquisition, the greater diversification it gives us and
the progress we have made this year mean Liontrust is well
positioned to maintain our growth and have a positive impact on our
investors, shareholders and the wider society."
(2) Source: Financial Express to 30 September 2020 as at 19
November 2020, bid-bid, total return, net of fees , based on
primary share classes.
For further information please contact:
Liontrust Asset Management Plc (Tel: 020 7412 1700, Website:
liontrust.co.uk)
John Ions
Vinay Abrol
Simon Hildrey - Chief Marketing Officer
David Boyle - Head of Corporate Development
N+1 Singer Advisory LLP (Tel: 020 7496 3000)
Corporate Broking- Tom Salvesen
Panmure Gordon (Tel: 020 7886 2500)
Corporate Advisory: Stephen Howard
Corporate Broking: Charles Leigh-Pemberton
Chairman's Statement
I am proud of how well your Company has responded to the ongoing
challenges posed by Covid-19 and the actions taken to try to defeat
the virus. The Company and all employees reacted and adapted
quickly to the pandemic and working from home.
Liontrust has continued to operate efficiently and productively
with no disruption for investors, with your Company generating
strong net positive flows of GBP1.75 billion in the six months to
30 September. This has been achieved without the usual face-to-face
interaction with colleagues, clients and companies that is so
important to the normal functioning of asset management.
The Board has been very impressed with what the business and
everyone working at Liontrust has accomplished during the first
lockdown and subsequently. The investment processes have been truly
tested and have shown their robustness.
This is a credit to your management, the business processes in
place and the culture of Liontrust. Key decisions have continued to
be made and implemented, ensuring that Liontrust will come out of
the Covid-19 pandemic in a strong position.
These decisions include the acquisition of the Architas UK
Investment Business, which was successfully completed on 30 October
2020. Acquiring and integrating a new business is challenging at
the best of times but especially so and impressive during a global
pandemic. The Board thanks everyone for their hard work, dedication
and professionalism in completing this purchase.
The addition of the Architas UK Investment Business is part of
Liontrust 's strategic objective of expanding distribution and
product and of acquiring talent. This acquisition will
significantly increase our presence among financial advisers and
enable us to enhance further our service levels.
Liontrust also announced after the reporting period the sale of
the Asia team to Somerset Capital Management LLP and closing the
European Income and Macro Thematic investment teams. The decision
was part of a review of our fund ranges and an evaluation of where
best to allocate our resources and we are proposing to merge the
funds of the European Income and Macro Thematic teams with funds
managed by the Cashflow Solution, Economic Advantage and Global
Equity teams.
Our six fund management teams are providing investors with
strong long-term performance and they have the scale and are
investing in asset classes that will enable them to grow their
AuMA. They are aided in this by excellent sales and marketing,
robust operations and moving to a single administration platform
across our fund ranges.
Next month we will be issuing Liontrust's first Assessment of
Value Report which evaluates whether our funds are delivering value
to our investors. This has been an important and beneficial process
for Liontrust to go through, including asking for the views of our
clients, and we believe this will be informative and useful for our
investors.
It is for these reasons that I have confidence in Liontrust
withstanding the current challenges and continuing to deliver for
investors and to expand the business.
Results
Liontrust has delivered profit before tax of GBP6.874 million
(2019: GBP9.303 million), a decrease of 26% compared to the
equivalent period last year.
The adjusted profit before tax was GBP22.296 million (2019:
GBP17.017 million), an increase of 31%. Adjusted profit before tax
is disclosed in order to give shareholders an indication of the
profitability of the Group excluding non-cash expenses
(depreciation and intangible asset amortisation) and non-recurring
(acquisition related and associated restructuring, share
incentivisation and severance compensation related) expenses.
See note 6 below for a reconciliation of adjusted profit (or
loss) before tax.
Dividend
In accordance with the Company's dividend policy, and to create
more balance between the First and Second Interim dividends, the
Board is declaring a First Interim dividend of 11.0 pence per share
(2019: 9.0 pence), an increase of 22%, which will be payable on 8
January 2020 to shareholders who are on the register as at 4
December 2020, the shares going ex-dividend on 3 December 2020.
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 18 December
2020. 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).
Assets under management and advice
On 30 September 2020, our AuMA stood at GBP20,598 million(3) and
were broken down by type and process as follows:
Process Total Institutional UK Retail Multi-Asset Offshore
Funds
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
Economic Advantage 7,856 252 7,408 - 196
Sustainable Investment 7,466 45 6,914 - 507
Global Equity 2,491 195 2,296 - -
Cashflow Solution 1,067 678 338 - 51
Multi-Asset 963 - - 963 -
Global Fixed Income 755 - 332 - 423
Total - 30 September
2020 20,598 1,170 17,288 963 1,177
Architas UK Investment
Business(4) 5,617 - 4,855 762 -
Total including
Architas UK Investment
Business 26,215 1,170 22,143 1,725 1,177
On 20 November 2020, our AuMA was GBP28,060 million(4) .
(3) Asia Income team AuMA is excluded as the investment team and
funds are in the process of being transferred to Somerset Capital
Management LLP or being closed. AuMA for the European Income team
is included in the Cashflow Solution investment team AuMA and the
Macro Thematic team AuMA is included in the Global Equity
investment team and Economic Advantage investment team AuMA.
(4) The acquisition of the Architas UK Investment Business
completed on 30 October 2020 adding GBP5,617 million to AuMA.
Inflows
The net inflows over the six months to 30 September 2020 are
GBP1,748 million (2019: GBP1,367 million). A reconciliation of fund
flows and AuMA over the six months to 30 September 2020 is as
follows:
Offshore
Total Institutional UK Retail Multi-Asset Funds
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
Opening AuMA - 1 April
2020 16,078 988 13,275 840 975
Net flows 1,748 50 1,607 28 63
Market and Investment
performance 2,869 132 2,488 95 154
Acquisition/(Disposal)
of AuMA(5) (97) - (82) - (15)
Closing AuMA - 30
September 2020 20,598 1,170 17,288 963 1,177
(5) The sale of the Asia Income investment team was announced on
2 October 2020 and is expected to complete in the first quarter of
2021.
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 2 25/03/2009
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust Special
Situations Fund 1 1 1 1 10/11/2005
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust UK Smaller
Companies Fund 1 1 1 1 08/01/1998
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust UK Micro
Cap Fund 1 - 1 1 09/03/2016
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Sustainable Future
funds
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust Monthly
Income Bond Fund 2 2 4 3 12/07/2010
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust SF Managed
Growth Fund 1 1 1 1 19/02/2001
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust SF Corporate
Bond Fund 1 2 3 2 20/08/2012
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust SF Cautious
Managed Fund 1 1 1 1 23/07/2014
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust SF Defensive
Managed Fund 1 1 1 1 23/07/2014
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust SF European
Growth Fund 1 1 1 1 19/02/2001
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust SF Global
Growth Fund 3 1 1 1 19/02/2001
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust SF Managed
Fund 1 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
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Global Equity funds(6)
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust Balanced
Fund 1 1 1 1 31/12/1998
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust China Fund 4 4 3 3 31/12/2004
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust Emerging
Market Fund 3 2 3 3 30/09/2008
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust European
Opportunities Fund 2 4 4 4 29/11/2002
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust Global
Smaller Companies
Fund 1 1 1 1 01/07/2016
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust Global
Alpha Fund 1 1 1 1 31/12/2001
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust Global
Dividend Fund 2 2 1 1 20/12/2012
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust Global
Equity Fund 1 1 1 1 31/12/2001
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust Global
Technology Fund 2 - 1 2 15/12/2015
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust Income
Fund 1 1 1 1 31/12/2002
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust Japan Equity
Fund 3 2 3 2 22/06/2015
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust Japan Opportunities
Fund 1 4 4 4 30/09/2002
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust US Income
Fund 4 3 4 4 30/09/2010
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust US Opportunities
Fund 1 2 1 1 31/12/2002
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Cashflow Solution funds
------------------------------------------------------------------------------- ---------- ---------------
Liontrust European
Growth Fund 1 2 3 2 15/11/2006
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Liontrust Global
Income Fund 4 4 4 4 03/07/2013
------------------------------- ---------------------- ---------- ---------- ---------- ---------------
Source: Financial Express to 30 September 2020 as at 20 November
2020, bid-bid, total return, net of fees , based on primary share
classes. The Liontrust UK Mid Cap Fund, Liontrust UK Opportunities
Fund, Liontrust Asia Income Fund and funds previously managed by
the European Income and Macro Thematic investment teams are
excluded. 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 or UK authorised ICVCs (primary
share class).
(6) Liontrust Latin America Fund, Liontrust Russia Fund and
Liontrust India Fund are not included as they are in IA sectors
that are not rankable (e.g. Specialist and Unclassified) as it
would not be a fair comparison to make.
Outlook
Liontrust's focus on robust investment processes and building
performance, a business, a brand and client relationships for the
long term have proved their value during this year's crisis. This
gives Liontrust resilience and the ability to continue to grow in
the future.
Alastair Barbour
Non-executive Chairman
Consolidated Statement of Comprehensive
Income
Six months ended 30 September
2020
Six Six Year
months
months to to ended
30-Sep-20 30-Sep-19 31-Mar-20
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
Revenue 4 75,780 53,098 124,025
Cost of sales 4 (12,724) (7,167) (17,393)
------------------------------------ ------ ------------ ------------ ----------
Gross profit 63,056 45,931 106,632
Unrealised profit on financial
assets 316 251 (283)
Administration expenses 5 (56,436) (36,873) (89,711)
------------------------------------ ------ ------------ ------------ ----------
Operating profit 6,936 9,309 16,638
Interest receivable 4 6 18
Interest payable (66) (12) (148)
------------------------------------ ------ ------------ ------------ ----------
Profit before tax 6,874 9,303 16,508
Taxation 7 (1,588) (1,727) (3,544)
------------------------------------ ------ ------------ ------------ ----------
Profit for the period 5,286 7,576 12,964
Other comprehensive income - - -
Total comprehensive income 5,286 7,576 12,964
==================================== ====== ============ ============ ==========
Pence Pence Pence
----------------------------------- ------ ------------ ------------ ----------
Basic earnings per share 8 9.21 15.02 24.68
Diluted earnings per share 8 9.00 14.51 23.87
------------------------------------ ------ ------------ ------------ ----------
Consolidated Balance
Sheet
As at 30 September 2020
30-Sep-20 30-Sep-19 31-Mar-20
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
Assets
Non current assets
Intangible assets 9 36,565 10,497 37,922
Goodwill 19,626 11,872 19,626
Property, plant and
equipment 6,875 1,830 7,850
63,066 24,199 65,398
------------------------ ------ -------------- ---------------------------------- -------------------------
Current assets
Trade and other
receivables 186,119 117,518 175,532
Financial assets 10 1,859 3,264 2,817
Cash and cash
equivalents 98,602 27,769 40,294
------------------------- ------
Total current assets 286,580 148,551 218,643
------------------------- ------ -------------- ---------------------------------- -------------------------
Liabilities
Non current liabilities
Deferred tax liabilities (6,197) (1,508) (6,440)
Lease liability (6,668) (2,066) (5,769)
Total non current
liabilities (12,865) (3,574) (12,209)
------------------------- ------ -------------- ---------------------------------- -------------------------
Current liabilities
Trade and other payables (190,312) (115,584) (181,693)
DVBAP liability (367) (374) (845)
Corporation tax payable (1,314) - (734)
Total current
liabilities (191,993) (115,958) (183,272)
------------------------- ------ -------------- ---------------------------------- -------------------------
Net current assets 94,587 32,593 35,371
------------------------- ------ -------------- ---------------------------------- -------------------------
Net assets 144,788 53,218 88,560
========================= ====== ============== ================================== =========================
Shareholders' equity
Ordinary shares 606 509 555
Share premium 121,809 19,745 57,439
Capital redemption
reserve 19 19 19
Retained earnings 27,544 36,491 36,409
Own shares held (5,190) (3,546) (5,862)
Total equity 144,788 53,218 88,560
========================= ====== ============== ================================== =========================
Consolidated Cash Flow Statement
Six months ended 30 September
2020
Six Six Year
months
months to to ended
30-Sep-20 30-Sep-19 31-Mar-20
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Cash inflow from operations 74,765 63,627 96,359
Cash outflow from operations (71,090) (62,941) (79,019)
Cash inflow from changes in unit
trust receivables and payables 2,357 576 1,561
----------------------------------------- ------ ---------------------------------- ------------------------- ----------
Net cash from operations 6,032 1,262 18,901
Interest received 4 6 18
Tax paid (1,316) - -
---------------------------------- ------------------------- ----------
Net cash from operating activities 4,720 1,268 18,919
----------------------------------------- ------ ---------------------------------- ------------------------- ----------
Cash flows from investing activities
Purchase of property, plant and
equipment (99) - (174)
Cash acquired from acquisition
of Neptune - - 3,661
Purchase of financial assets - (1,362) (1,362)
Sale of financial assets 1,334 1,333 1,333
Purchase of seeding investments (47) (50) (169)
Sale of seeding investments - 51 50
----------------------------------------- ---------------------------------- ------------------------- ----------
Net cash from/(used in)used in
investing activities 1,188 (28) 3,339
----------------------------------------- ------ ---------------------------------- ------------------------- ----------
Cash flows from financing activities
Purchase of own shares - (732) (3,310)
Sale of own shares 672 477 743
Lease financing costs - (228) -
Issue of shares 66,170 1,537 -
Dividends paid (14,442) (10,076) (14,948)
--------------------------------- ------ ------ ---------------------------------- ------------------------- ----------
Net cash from/(used in) financing
activities 52,400 (9,022) (17,515)
Net increase/(decrease) in cash
and cash equivalents 58,308 (7,782) 4,743
Opening cash and cash equivalents* 40,294 35,551 35,551
Closing cash and cash equivalents 98,602 27,769 40,294
========================================= ====== ================================== ========================= ==========
* Cash and cash equivalents consist only of cash balances.
Consolidated Statement of Change in Equity (unaudited)
Six months ended 30 September 2020
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
2020 brought forward 555 57,439 19 36,409 (5,862) 88,560
Profit for the
period - - - 5,286 - 5,286
-------------------------- ------------------------ ------------------------ ------------------------ ----------------------- ------------------------ ---------
Total comprehensive
income for the
period - - - 5,286 - 5,286
Dividends paid - - - (14,442) - (14,442)
Shares issued 51 64,370 - - - 64,421
Sale of own shares - - - - 672 672
Equity share options
issued - - - 823 - 823
Equity share options
settled - - - (532) - (532)
Balance at 30 September
2020 606 121,809 19 27,544 (5,190) 144,788
========================== ======================== ======================== ======================== ======================= ======================== =========
Consolidated Statement of Change in Equity (unaudited)
Six months ended 30 September 2019 (Restated)
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 2019
brought forward 507 19,745 19 38,591 (3,291) 55,571
Adjustment to opening
reserves - IFRS 16 Leases - - - (716) - (716)
------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ---------
Revised 1 April 2019
brought forward 507 19,745 19 37,875 (3,291) 54,855
Profit for the period - - - 7,576 - 7,576
----------------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ---------
Total comprehensive income
for the period - - - 7,576 - 7,576
Dividends paid - - - (10,076) - (10,076)
Shares issued 2 - - - - 2
Purchase of own shares - - - - (255) (255)
Equity share options
issued/(settled) - - - 1,116 - 1,116
Balance at 30 September
2019 509 19,745 19 36,491 (3,546) 53,218
============================= ======================== ======================== ======================== ======================== ======================== =========
* as noted in note 1 v) of the 31 March Annual report, the financial
statements were restated to reflect the correct treatment of
the settlement of LTIPs
Consolidated Statement of Change in Equity (audited)
Year ended 31 March 2020
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 2019
brought forward 507 19,745 19 38,591 (3,291) 55,571
Adjustment to opening
reserves - IFRS 16 Leases - - - (218) - (218)
------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ---------
Revised 1 April 2019
brought forward 507 19,745 19 38,373 (3,291) 55,353
Profit for the year - - - 12,964 - 12,964
Total comprehensive income
for the year - - - 12,964 - 12,964
Dividends paid - - - (14,948) - (14,948)
Shares issued 48 37,694 - - - 37,742
(Purchase)/sale of own
shares - - - - (2,652) (2,652)
EBT share option settlement - - - - 81 81
Share options issued - - - 1,934 - 1,934
Equity share options
settled - - - (1,914) - (1,914)
Balance at 31 March
2020 555 57,439 19 36,409 (5,862) 88,560
======================== ======================== ======================== ======================== ======================== =========
Notes to the Financial Statements
1. Principal accounting policies
This Half Yearly Report is unaudited and does not constitute
statutory accounts within the meaning of s434 of the Companies Act
2006. The financial information for the half years ended 30
September 2020 and 2019 has not been audited or reviewed by the
auditors pursuant to the Auditing Practices Board guidance on
Review of Interim Financial Information. The statutory accounts for
the year ended 31 March 2020, which were prepared in accordance
with International Financial Reporting Standards, comprising
standards and interpretations approved by either the International
Accounting Standards Board or the International Financial Reporting
Interpretations Committee or their predecessors, as adopted by the
European Union ("IFRS"), and with those parts of the Companies Act
2006 applicable to companies reporting under IFRS, have been
delivered to the Registrar of Companies. The auditors' opinion on
these accounts was unqualified and did not contain a statement made
under s498 of the Companies Act 2006.
The financial statements have been prepared in accordance with
the Disclosure Guidance and Transparency Sourcebook and with IAS 34
'Interim Financial Reporting'.
The accounting policies applied in this Half Yearly Report are
consistent with those applied in the Group's most recent annual
accounts
2. Alternative Performance Measures
The Group assess its performance using a variety of measures
that are not defined under IFRS and are therefore termed
alternative performance measures ("APM's").
The Group uses the APM's to present its financial performance,
in a manner which is aligned with the requirements of our
stakeholders. By presenting these APM's it enables comparison with
our peers who may use different accounting policies.
The Group uses the following APM's:
Alternative Performance
Measure Definition Reconciliation
Adjusted profit before Profit before taxation, Note 6
tax depreciation and amortisation,
share incentivisation
expenses and non-recurring
items (which include:
professional fees relating
to acquisitions, cost
reduction, restructuring
and severance compensation
related costs).
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. Calculation of Adjusted profit
before tax excludes share incentivisation expenses for similar
reasons to above, and in particular 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
business is performing without the effects of share incentivisation
expenses which can be influenced by other factors such as the
timing of grants due to prohibited periods, shareholder approval
of share incentivisation plans, and other factors.
Adjusted operating Operating Profit before Note 6
profit depreciation and amortisation,
share incentivisation
expenses and non-recurring
items (which include:
professional fees relating
to acquisitions, cost
reduction, restructuring
and severance compensation
related costs).
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. Calculation of Adjusted operating
profit before tax excludes share incentivisation expenses for
similar reasons to above, and in particular provides shareholders,
potential shareholders and financial analysts a consistent year
on year basis of comparison of a "operating profit 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 business is performing without the effects
of share incentivisation expenses which can be influenced by
other factors such as timing of grants due to prohibited periods,
shareholder approval of share incentivisation plans, and other
factors.
Revenues excluding Gross profit less any Note 4
performance fees revenue attributable
to
performance related
fees.
This is used to present a consistent year on year measure of
revenues within the business, removing the element of revenue
that may fluctuate year on year.
Adjusted basic earnings Adjusted profit before
per share tax divided by the weighted
average number of shares
in issue for the period n/a
Adjusted diluted earnings Adjusted profit before
per share tax divided by the diluted
weighted average number
of shares in issue for
the period n/a
3. Segmental reporting
The Group's operates in only 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-making body 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-20 30-Sep-19 31-Mar-20
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Revenue
- Revenue 75,780 53,098 123,021
- Performance fee revenue - - 1,004
---------------------------- ------------ ------------ ----------
Total Revenue 75,780 53,098 124,025
---------------------------- ------------ ------------ ----------
Cost of sales (12,724) (7,167) (17,393)
Gross Profit 63,056 45,931 106,632
============================ ============ ============ ==========
Revenue from earnings includes:
1. Investment management on unit trusts, open-ended investment
companies sub-funds, portfolios and segregated accounts;
2. Performance fees on unit trusts, open-ended investment
companies sub-funds, portfolios and segregated accounts;
3. Fixed administration fees on unit trusts and open-ended
investment companies sub-funds;
4. Net value of sales and repurchases of units in unit trusts
and shares in open-ended investment companies (net of
discounts);
5. Net value of liquidations and creations of units in unit
trusts and shares in open-ended investment companies sub-funds;
6. Box profits on unit trusts; and
7. Foreign currency gains and losses.
Cost of sales includes:
1. 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;
2. Rebates paid on investment management fees;
3. Sales commission paid or payable; and
4. External investment advisory fees paid or payable.
5. Administration expenses
Six Six Year
months
to months to ended
30-Sep-20 30-Sep-19 31-Mar-20
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Employee related expenses
Director and employee costs 11,710 5,695 14,047
Pension costs 656 310 866
Share incentivisation expense 2,049 4,194 3,725
DBVAP expense 856 702 1,335
Severance compensation 214 - 1,886
15,485 10,901 21,859
Non employee related expenses
Members' drawings charged as
an expense 16,387 14,029 31,993
Members' share incentivisation
expense 1,045 348 1,126
Professional services(1) 10,047 1,540 8,437
Depreciation and Intangible asset
amortisation(2) 2,429 1,424 5,392
IFRS16 related finance costs - (240) -
Other administration expenses 11,043 8,871 20,904
----------------------------------- ------------ ------------ ----------
Total administration expenses 56,436 36,873 89,711
=================================== ============ ============ ==========
(1) Includes costs relating to the re organisation of Neptune
outsourced transfer agency administration and acquisition costs
related to the purchase of the Architas UK Investment Business.
(2) Includes Fixed asset depreciation, depreciation on leases
under IFRS16 and amortisation of intangible assets
6. Adjusted profit before tax
Adjusted profit before tax is reconciled in the table below:
Six Six Year
months
to months to ended
30-Sep-20 30-Sep-19 31-Mar-20
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Profit for the period 5,286 7,576 12,964
Taxation 1,588 1,727 3,544
----------------------------------- ------------ ------------ ----------
Profit before tax 6,874 9,303 16,508
Share incentivisation expense 3,094 4,542 4,851
DBVAP expense net of gain or
loss 540 452 1,551
Severance compensation 214 - 2,296
Professional services(1) 10,047 1,540 8,436
IFRS 16 finance costs (902) (240) (980)
Depreciation and Intangible asset
amortisation(2) 2,429 1,424 5,392
Adjustments 15,422 7,718 21,546
----------------------------------- ------------ ------------ ----------
Adjusted profit before tax 22,296 17,021 38,054
----------------------------------- ------------ ------------ ----------
Interest receivable (4) (6) (18)
Interest payable (2) - 12 -
Adjusted operating profit 22,292 17,027 38,036
----------------------------------- ------------ ------------ ----------
Adjusted basic earnings per share 31.46 27.34 58.68
Adjusted diluted earnings per
share 30.74 26.41 56.74
----------------------------------- ------------ ------------ ----------
(1) Includes costs relating to the re organisation of Neptune
outsourced transfer agency administration and acquisition costs
related to the purchase of the Architas UK Investment Business.
(2) Includes Fixed asset depreciation, depreciation on leases
under IFRS16 and amortisation of intangible assets
7. Taxation
The half yearly tax charge has been calculated at the estimated
full year effective UK corporation tax rate of 19% (2019: 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. The weighted average number of Ordinary
Shares for the six months ended 30 September 2020 was 57,406,615
(30 September 2019: 50,430,636, 31 March 2020: 52,531,287). 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 2020. The adjusted weighted average number of Ordinary
Shares so calculated for the period was 58,757,394 (30 September
2019: 52,212,068, 31 March 2020: 54,320,477). This is reconciled to
the actual weighted number of Ordinary Shares as follows:
30-Sep-20 30-Sep-19 31-Mar-20
Weighted average number of Ordinary
Shares 57,406,615 50,430,636 52,531,287
Weighted average number of dilutive
Ordinary shares under option:
- to Liontrust Long Term Incentive
Plan 1,323,491 1,776,755 1,779,742
- to Liontrust Company Share
Option Plan 27,288 4,677 9,448
Adjusted weighted average number
of Ordinary Shares 58,757,394 52,212,068 54,320,477
===================================== =========== =========== ===========
9. Intangible assets
Intangible assets represent investment management contracts that
have been capitalised upon acquisition and are amortised on a
straight-line basis over a period of 10 years or 20 years depending
on the type of contracts acquired. The intangible asset on the
balance sheet represents investment management contracts as
follows:
30-Sep-20 30-Sep-19 31-Mar-20
GBP'000 GBP'000 GBP'000
Investment management contracts
acquired from Argonaut - 1,497 -
Investment management contracts
acquired from ATI 7,800 9,000 8,400
Investment management contracts
acquired from Neptune 28,765 - 29,522
36,565 10,497 37,922
========== ========== ==========
10. 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 (as
detailed below), 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.
11. Related party transactions
During the six months to 30 September 2020 the Group received
fees from unit trusts and ICVCs under management of GBP59,466,000
(2019: GBP41,619,000). Transactions with these funds comprised
creations of GBP3,021,616,000 (2019: GBP2,106,127,000) and
liquidations of GBP1,405,734,000 (2019: GBP927,652,000). As at 30
September 2020 the Group owed the unit trusts GBP175,286,000 (2019:
GBP103,944,000) in respect of unit trust creations and was owed
GBP165,831,000 (2019: GBP103,831,000) in respect of unit trust
cancellations and fees.
During the six months to 30 September 2020 the Group received
fees from offshore funds under management of GBP3,044,000 (2019:
GBP2,093,000). Transactions with these funds comprised purchases of
GBP0 (2019: GBP40,000) and sales of GBP0 (2019: GBP0). As at 30
September 2020 the Group was owed GBP546,000 (2019: GBP365,000) 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.
12. Post balance sheet date event
On 30 October 2020, the Company acquired all of the ordinary
shares in Architas Multi-Manager Limited and Architas Advisory
Services Limited (together, the "Architas UK Investment Business"),
and subsequently renamed Liontrust Multi Asset Limited and
Liontrust Advisory Services Limited respectively.
The acquisition completed on 30 October 2020 for consideration
of up to GBP75 million in cash (inclusive of the expected net asset
value of the Architas UK Investment Business), funded from the
proceeds of a placing of ordinary shares of the Company, which was
completed in July 2020 and the Company's cash resources.
At the date of issue of these financial statements, the
valuation of the balance sheets is not complete. An updated
disclosure, including the valuation of the balances, will be
included in the 2021 Annual Report & Financial Statements.
13. Key risks
The Directors have identified the risks and uncertainties that
affect the Group's business and believe that they will be
substantially the same for the second half of the year as the
current risks as identified in the 2019 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, 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 developed indicators 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
49 of the 2020 Annual Report and Note 2 "Financial risk management"
on page 106 of the 2020 Annual Report.
14. Contingent assets and liabilities
The Group can earn performance fees on some of the segregated
accounts and funds 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 2020 has not been recognised in the results for the
year.
There were no contingent liabilities.
15. Directors' responsibilities
The Directors confirm that this condensed set of financial
statements has been prepared in accordance with IAS 34 as adopted
by the European Union, and that the Half Yearly Report herein
includes a fair review of the information required by DTR 4.2.7,
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 Ions Vinay Abrol
Chief Executive Chief Operating Officer and Chief Financial
Officer
24 November 2020
Forward Looking Statements
This report contains certain forward-looking statements with
respect to the financial condition, results of operations and
businesses and plans of the Group. These statements and forecasts
involve risk and uncertainty because they relate to events and
depend upon circumstances that have not yet occurred. There are a
number of factors that could cause actual results or developments
to differ materially from those expressed or implied by these
forward-looking statements and forecasts. Nothing in this
announcement should be construed as a profit forecast.
END
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END
IR BUBDBXDDDGGS
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November 25, 2020 02:00 ET (07:00 GMT)
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