REG - Liontrust Asset Mgmt - Final Results
26/06/2024 07:00
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RNS Number : 8588T Liontrust Asset Management PLC 26 June 2024
LEI: 549300XVXU6S7PLCL855
For immediate release
26 June
2024
LIONTRUST ASSET MANAGEMENT PLC
FULL YEAR RESULTS FOR THE YEAR ENDED 31 MARCH 2024
Liontrust Asset Management Plc ("Liontrust", the "Company", or the "Group"),
the specialist fund management group, today announces its audited results for
the financial year ended 31 March 2024.
· Gross Profit of £186.1 million (2023: £229.8 million), includes
£10.4 million of performance fee revenues (2023: £18.5 million), with a
Revenue margin(1) of 0.62% (2023: 0.62%).
· Adjusted profit before tax(1) of £67.4 million (2023: £87.1
million), a decrease of 23%.
· Adjusted operating margin(1) of 35.5% (2023: 37.7%).
· Adjusted diluted earnings per share(1) of 79.2 pence per share (2023:
109.8 pence per share), a decrease of 28%.
· Statutory Loss before tax of £0.6 million (2023: Statutory Profit
before tax of £49.3 million). See note 6 below for further detail and a
reconciliation to Adjusted profit before tax(1).
· Full year dividend maintained at 72p.
· On 31 March 2024, assets under management and advice ("AuMA") were
£27.8 billion (2023: £31.4 billion), a decrease of 11.5%.
· AuMA as at 20 June 2024 were £27.25 billion.
(1) This is an Alternative Performance Measure. See note 2 below.
Commenting, John Ions, Chief Executive Officer, said:
"Liontrust has delivered an Adjusted profit before tax(1) of £67.4 million
and a strong Adjusted operating margin(1) of 35.5% in spite of the challenging
environment for active managers over the past year.
We have started to see signs of a change in investor sentiment and this is
likely to move significantly when more central banks reduce interest rates and
there is greater political and fiscal certainty in the UK. There is no doubt
that the amount individuals are investing has been negatively impacted by the
cost of living, the reductions in Covid savings and tax rises. With more
stability will come greater recognition of valuation opportunities especially
in the UK stock market.
The negative investor sentiment has combined with a market environment over
the past 18 months that has proved a significant headwind for many of our
strategies and led to net outflows of £6.1 billion across the whole financial
year for Liontrust. This market environment has also prompted many
commentators to again question the value of active asset management.
The events of the last year have not reduced our belief in active management
but have reinforced the need for Liontrust to expand our investment capability
across asset classes and investment styles, broaden distribution and enhance
the Group's operations. As we could not accelerate these developments through
an acquisition, we have been pursuing them organically, through recruitment
and investment in the business. These actions are ensuring we can drive the
business forward and deliver on our strategic objectives.
We are building the business from a position of strength despite the
challenges of the past year. Liontrust has a high-profile and positive brand,
excellent investment teams, deep client relationships as well as good
operating margins.
The ability of the investment teams to deliver for clients over the long term
is shown by the fact that to 31 May 2024, 69% of Liontrust's funds were in the
first or second quartile of their respective IA sectors since the funds were
launched(2).
The Liontrust European Dynamic Fund won the award for best Europe ex UK Fund
for the third year running at the prestigious Fund Manager of the Year awards
on 20 June. The Liontrust European Strategic Equity Fund and the Liontrust
India Fund were both shortlisted for awards.
We are optimistic about the long-term outlook for the UK economy and stock
market. The UK has not lost the ability to develop world class businesses and
it is about providing the incentives and liquidity to encourage such companies
to list on the London Stock Exchange. A key part of this is attracting
international investors to reinvest back in the UK market.
We are well positioned for when the UK comes back into favour given that the
four funds managed by the Economic Advantage team, including Special
Situations, to 31 May 2024 are in the first quartile of their respective IA
sectors since launch(2).
One of our strategic objectives is to expand the Liontrust investment
proposition, which we have done through fund launches and the formation of the
Global Equities team headed by Mark Hawtin.
Another objective is to enhance distribution in the UK and internationally and
we have continued to do so through strengthening the UK sales team under
Kristian Cook with new senior hires, the recruitment of Jeremy Roberts as Head
of Global Distribution (ex UK) and the recent appointment of Michael Buchholz
as Head of Distribution for Germany and Austria. Michael will join in August
2024 and be based in the branch office in Frankfurt that we will open later
this year.
We have been investing to achieve the fourth strategic objective of
strengthening our technological, data and digital capability, which includes
implementing new portfolio management and research management systems. These
will give us a single front office operating platform providing Liontrust with
scalability, flexibility and efficiency to support future growth of the
business. This investment is a significant development in achieving the
operating model that we had identified as part of the proposed acquisition of
GAM Investments last year.
The Liontrust brand is strong. The most recent research shows that Liontrust
is regarded as the third best asset manager among financial advisers in the UK
and is eighth among wealth managers (source: Research in Finance).
Liontrust is also importantly achieving good rates of engagement with clients,
both through face-to-face presentations and digital content. For example,
there were more than two million views of Liontrust videos over the last
financial year. This is all contributing to Liontrust delivering our strategic
objective to enhance further the client experience.
Community engagement has been a long-term commitment for Liontrust, including
financial education and conservation. We have further raised the profile of
and engagement with our support of the conservation breeding programme for
endangered Asiatic lions at London Zoo. Primary school children around the UK
nominated more than 650 names for the three lion cubs recently born at London
Zoo and then listeners to Times Radio and readers of The Times voted for their
favourites from a short list of names for each cub.
Outlook
Liontrust has an expanding and compelling range of investment teams with
robust processes; broadening distribution and excellent client service; great
engagement with our campaigns and content; a strong brand; and an enhanced
operating model. This gives me great confidence that we have the platform to
succeed in delivering growth."
(1) This is an Alternative Performance Measure. See note 2 below.
(2) Source: Financial Express, bid-to-bid basis, net of fees. Statistics using
monthly return period.
For further information please contact:
Teneo (Tel: 020 7353 4200, Email: liontrust@teneo.com)
Tom Murray, Colette Cahill, Jessica Pine
Liontrust Asset Management Plc (Tel: 020 7412 1700, Website:
liontrust.co.uk)
Stephen Corbett: Head of Investor Relations
Simon Hildrey: Chief Marketing Officer
Singer Capital Markets (Tel: 020 7496 3000)
Corporate Broking: Charles Leigh-Pemberton
Corporate Finance: James Moat
Panmure Gordon (Tel: 020 7886 2500)
Corporate Broking: David Watkins
Corporate Advisory: Atholl Tweedie
HSBC Bank plc (Tel: 020 7991 8888)
Corporate Broking: Sam McLennan, James Hopton
Corporate Advisory: Alexander Paul
Chair's Statement
The Board of Directors are committed to Liontrust's vision and the strategy of
the Group. The underlying business is in better health than it has ever been
with regards to investment proposition, quality of our people, reach of sales
and marketing, and strengthening business infrastructure. We will not be
diverted from our long-term plan by short-term challenges.
Active management
There is no doubt we have been confronted by one of the toughest periods for
active asset managers. This is especially the case for those which offer
investment styles that have been largely out of favour during this environment
of interest rates remaining higher for longer than many expected. For
Liontrust, this has impacted our quality growth, small and mid caps,
sustainable investing, as well as UK equity, strategies; this is reflected in
the net outflows of £6 billion over the financial year.
Liontrust has always believed the best way of allocating capital to companies
and managing investments on behalf of clients is through active management
with robust investment processes and high-conviction portfolios. Each team at
Liontrust has the freedom to use their own distinct investment processes and
we continue to believe these are key to long-term performance and effective
risk control.
The need for individuals to take responsibility for their own savings and
ensure their future financial security will only grow in importance and this
can act as a tailwind for active managers. We believe those active managers
who deliver value will continue to have a key role for investors in achieving
their financial objectives. We recognise active managers and investment
processes do not always deliver alpha in a consistent and predictable manner;
in some years, as we have seen recently, processes will underperform, but we
are confident they will deliver for clients over the long term.
John Ions, Vinay Abrol, and the rest of Liontrust are working hard to enable
the Group to return to net inflows and are not simply waiting for market
sentiment to change. In his statement below, John explains the strategy for
delivering growth and the many actions that have already been taken to ensure
Liontrust is well positioned for the future and can take advantage of
opportunities.
Robust business
I am pleased to report that the Liontrust operating model is robust with the
Group capital position remaining strong. Over the financial year, Liontrust
delivered adjusted profit before tax of £67.4 million, gross profit of £186
million and the full year dividend is maintained at 72p per share. Our
financial strength has been aided by our flexible remuneration model for
investment managers through their revenue share model. This ensures the
investment managers are fully aligned with the business and investors as AuMA
rises and falls.
Liontrust remains in robust financial health with £104 million of cash and
cash equivalents on the balance sheet and surplus capital of nearly £80
million as at 31 March 2024.
Strategy
A strategic objective that John talks about in detail in his statement is the
further diversification of our fund range and investment teams. We have seen
clearly why this is important given the market environment of the last few
years. Diversification can be achieved through launching funds for existing
investment teams and recruiting new teams as we have done with the Global
Equities team. The Board also believes in selective acquisitions that
accelerate the development of Liontrust and its ability to grow, typically
through bringing in investment teams that complement our existing capability
or expand distribution.
It is in this context that our endeavour to acquire GAM Holding AG in the
first half of the financial year should be viewed. It presented the
opportunity to expand rapidly our investment management and distribution
capability, as well as enhance the operations and administration of the Group.
Alongside acquisitions, Liontrust continues to pursue these objectives through
recruitment and internal developments.
People and sustainability
There are many ways in which Liontrust has responsibilities to investors,
employees, stakeholders, the planet and society. These responsibilities range
from engagement with the companies we invest in, through commitments to net
zero, DE&I (Diversity, Equity, Inclusion) and the well-being of employees,
to contributing to the financial services industry and our community.
Liontrust has been investing in and developing our people, including through a
leadership programme, coaching, training and a mentoring scheme.
In May 2022, Liontrust signed up to the Net Zero Asset Managers' initiative
(NZAM). This commitment covers the Group's net zero targets for the
investments it makes on behalf of clients. At the time it joined, Liontrust
committed approximately 42% of its AuMA to NZAM. As at the end of December
2023, the percentage of the Group's AuMA committed had risen to 45%. In 2023,
Liontrust set near-term science based emissions reduction targets (which were
approved by the Science Based Targets initiative, or SBTi) to show the Group's
commitment to reducing emissions in line with the Paris Agreement goals.
Board of Directors
I would like to welcome publicly Miriam Greenwood to the Board, who joined us
in November and has become Chair of the Remuneration Committee. Miriam brings
extensive experience and expertise to the Remuneration Committee and the Board
as a whole.
In becoming Chair of the Remuneration Committee, Miriam has succeeded George
Yeandle, who is retiring from the Board at the AGM in September 2024. George
has shown outstanding leadership of the Remuneration Committee over the last
nine years and I want to thank him for his great contribution to the Board.
We have announced previously that the process of seeking a new Chair had
started. This process is progressing well and we will update shareholders when
we have news on an appointment.
Results
Gross Profit of £186.1 million (2023: £229.8 million), includes £10.4
million of performance fee revenues (2023: £18.5 million), with a Revenue
Margin(1) of 0.620% (2023: 0.625%) on Average AuMA of £28,330 million (2023:
£33,815 million).
Adjusted profit before tax(1) is £67.430 million (2023: £87.083 million), a
decrease of 22.6% compared to last year, with an Adjusted Operating Margin(1)
of 35.5% (2023: 37.7%).
Statutory Loss before tax of £0.6 million (2023: Statutory Profit before tax
of £49.3 million), This includes charges of £68.0 million (2023: £37.8
million) relating to acquisitions and non-recurring costs (£18.8 million);
the non-cash amortisation and impairment of the acquisition-related intangible
assets and goodwill (amortisation: £12.1 million, impairment: £37.1
million).
Adjusted profit before tax(1) is disclosed in order to give shareholders an
indication of the profitability of the Group excluding non-cash (intangible
asset amortisation) expenses and non-recurring (professional fees relating to
acquisition, cost reduction, restructuring and severance compensation related)
expenses. See note 6 below for a reconciliation of Adjusted profit before
tax(1).
(1) This is an Alternative Performance Measure. See note 2 below.
Dividend
The Board has declared a second interim dividend of 50.0 pence per share
(2023: 50.0 pence) bringing the total dividend for the financial year ending
31 March 2024 to 72.0 pence per share (2023: 72.0 pence per share).
The second interim dividend will be payable on 9 August 2024 to shareholders
who are on the register as at 5 July 2024, the shares going ex-dividend on 4
July 2024. Last day for Dividend Reinvestment Plan elections is 19 July 2024.
Looking forward
Liontrust has built a great business of which I am proud to be Chair. This has
been based on the hard work and dedication of the team at Liontrust, along
with their expertise, and the Board thanks everyone for their contribution. We
are confident the actions taken by management will reap rewards in the future.
Alastair Barbour
Non-executive Chair
25 June 2024
Chief Executive Officer's Report
This has been a challenging year for Liontrust. As the Chair has outlined in
his statement, the market environment and investor sentiment has been negative
for many of our strategies and this has driven the net outflows for Liontrust
over the financial year.
We have full confidence in our proven investment teams and processes
delivering over the long term for investors. Liontrust has also been
developing the business to put it in a strong position to drive the next stage
of our growth. We are pleased with the progress we have been making and how
Liontrust is structured to capitalise on the opportunities ahead after the
headwinds that the Group has faced over the last year.
Investment proposition
We have continued to expand Liontrust's investment proposition as part of the
strategic objective to diversify the product range. Liontrust has added the
Global Equities team headed by Mark Hawtin. Mark has 40 years of investment
experience, having been Head of Global Equities at GAM Investments and a
partner and portfolio manager at Marshall Wace Asset Management. We are very
pleased with the feedback about the new team and they are already bringing us
opportunities to broaden our client base globally.
The Economic Advantage team headed by Anthony Cross has expanded their
capability through the recruitment of Alexander Game from Unicorn Asset
Management, while Natalie Bell is now a named manager of the UK Smaller
Companies and UK Micro Cap funds.
The outflows of assets from UK equity funds and depressed valuations of UK
listed companies is threatening the robustness of the stock market. Many
fantastic UK companies are being taken private too cheaply, are subject to
takeovers by overseas companies or are choosing to list outside the UK. For
these reasons, we support initiatives that will attract greater capital and
companies to the UK stock market.
We welcomed the Government's announcement of the intention to bring in a UK
ISA. Liontrust, particularly the Economic Advantage team, has been actively
engaged with the Government over the idea and the subsequent consultation.
Liontrust believes in the long-term potential of the UK economy and its
ability to produce world class companies. What we need are the incentives to
encourage these companies to list on the UK market.
Liontrust expanded the fund offering during the last year with the launch of
the GF Sustainable Future US Growth Fund in July 2023, which is managed by the
Sustainable Investment team, and the GF Pan-European Dynamic Fund in February
2024, which is managed by the Cashflow Solution team and attracted more than
€200 million within four months.
The Liontrust European Dynamic Fund won the award for best Europe ex UK Fund
for the third year running at the prestigious Fund Manager of the Year awards
on 20 June. The Liontrust European Strategic Equity Fund and the Liontrust
India Fund were both shortlisted for awards.
Liontrust has continued to deliver strong long-term fund performance for our
clients. Of Liontrust's funds, 75% are in the first or second quartile of
their respective sectors since the funds were launched to 31 March 2024(1).
Liontrust has been merging funds where we can produce economies of scale for
the benefit of investors, such as the Global Equity and Global Focus funds
into the Global Alpha Fund. These mergers also enable the Group to focus on
those funds where there is significant existing or potential client demand.
(1) Source: Financial Express, bid-to-bid basis, net of fees, primary share
classes. Statistics using monthly return period.
Expand distribution
Another of our four strategic objectives is to further broaden distribution
and the client base and we have made significant progress in this area as well
by strengthening the sales team in both the UK and internationally. We made
two internal appointments with Kristian Cook becoming Head of UK Distribution
and Mark Wright being named Head of UK Regional Distribution. We have also
recruited a new head of strategic partners in the UK and business development
managers for London and the South-East of England.
Jeremy Roberts joined from GAM Investments in March 2024 to be Head of Global
Distribution (ex UK) with responsibility for developing sales internationally.
We have strengthened our distribution capability in Germany with the
appointment of Michael Buchholz. He joins Liontrust in August 2024 as Head of
Distribution for Germany and Austria and will be based in the branch office in
Frankfurt that will open later this year. Jeremy will be making further hires
to build the international sales team and we will be expanding our physical
presence in continental Europe.
Client experience
We have also focused on providing an excellent level of service and engagement
with clients and ensuring there is a high level of awareness and understanding
of Liontrust funds. Nearly 1,800 professional intermediaries attended
Liontrust events in 2023 and around 400 have attended the adviser roadshow
around the UK in the spring and early summer of 2024 at which the Sustainable
Investment and Global Innovation teams have been presenting. Liontrust has a
series of events for professional intermediaries planned through the autumn.
Liontrust is generating strong investor engagement through our marketing, with
significant development of our digital presence. Liontrust fund manager videos
had more than 2.3 million views from February 2023 to February 2024. A new
weekly video that started in March 2024 to provide a bite-size review of the
latest market and economic news had attracted 42,000 views in the first nine
weeks.
Also, from February 2023 to February 2024, Liontrust's LinkedIn channel had
8.71 million impressions and 68,578 clicks. LinkedIn followers have grown by
nearly 50% in the 15 months to June 2024.
Strengthen technology and data
Another key way in which Liontrust has been ensuring we are in a strong
position for the future is through developing our technological and data
capability. This includes implementing new front office portfolio management
and research management systems. These will give us a single front office
operating platform that provides Liontrust with scalability, flexibility and
efficiency to support future growth of the business. These systems will
improve the quality and efficiency of delivering and analysing data and
greater productivity across the business. In time, this will lead to
enhancements for client service and reporting, enabling Liontrust to develop
further our digital capability.
In September 2023, we started a programme to implement a strategic Enterprise
Platform and associated Operating Model which includes new Front Office
tooling - BlackRock Aladdin, with FlexTrade as the EMS, an extended Middle
Office operating model with BNY and the implementation of BNY Front Office
Service, and a new Enterprise Data platform - BNY Data Vault.
In December 2023, we implemented FactSet RMS, a flexible, scalable and
consistent research management system which allows our investment teams to
store, collaborate and analyse research, both internally generated and
externally acquired. FactSet RMS allows us to leverage technology to generate
insight and drive efficiencies, while also supporting growing regulatory
reporting requirements and preparing for emerging technologies like AI
(artificial intelligence).
Liontrust Foundation
Liontrust established its charitable foundation during the financial year. The
Liontrust Foundation has been set up to promote social mobility and preserve
and recover nature. The Foundation is committed to empowering young
entrepreneurs and promoting DE&I in particular through these two
objectives.
We have a very strong Board of Trustee Directors, who are chaired by Simon
Hildrey, Chief Marketing Officer at Liontrust. The other trustees are Mandy
Donald (Non-executive Director of Liontrust), Nathalie Richards (CEO of SEO
London) and Dr Andrew Terry (Director of Conservation and Policy at Zoological
Society of London).
Outlook
Liontrust has put in place the structure to deliver growth. We have an
expanding and compelling range of investment teams with robust processes;
broadening distribution and excellent client service; great engagement with
our campaigns and content; a strong brand; and an enhanced operating model.
This gives me confidence that we are able to take advantage of the
opportunities and mitigate the challenges for active asset managers in the
future.
John Ions
Chief Executive Officer
25 June 2024
Assets under management and advice
On 31 March 2024, our AuMA stood at £27,822 million and were broken down by
type and investment process as follows:
Process Total Institutional Accounts & Funds Investment Trusts UK Retail Funds & MPS Alternative Funds International Funds & Accounts
(£m) (£m) (£m) (£m) (£m) (£m)
Sustainable Investment 10,433 323 - 9,624 - 486
Economic Advantage 6,571 450 - 5,998 - 123
Multi-Asset 4,344 - - 4,220 124 -
Global Innovation 827 - - 827 - -
Cashflow Solution 2,184 556 - 1,404 112 112
Global Fundamental 3,267 412 1,135 1,706 - 14
Global Fixed Income 196 - - 36 - 160
Total 27,822 1,741 1,135 23,815 236 895
AuMA as at 20 June 2024 were £27,250 million.
Net Flows
The Net outflows over the Financial Year were £6,083 million (2023: £4,842
million). A reconciliation of fund flows and AuMA over the financial year
ended 31 March 2024 is as follows:
Total Institutional Accounts & Funds Investment Trusts UK Retail Funds & MPS Alternative Funds International Funds & Accounts
(£m) (£m) (£m) (£m) (£m) (£m)
Opening AuMA - 1 April 2023 31,430 2,394 1,139 25,721 1,084 1,092
Net flows (6,083) (925) (92) (3,999) (821) (246)
Market and Investment performance 2,475 272 88 2,093 (27) 49
Closing AuMA - 31 March 2024 27,822 1,741 1,135 23,815 236 895
Consolidated Statement of Comprehensive Income for the year ended 31 March
2024
Year Year
ended ended
31-Mar-24 31-Mar-23
Notes £'000 £'000
Revenue 4 197,889 243,339
Cost of sales 4 (11,828) (13,569)
Gross profit 186,061 229,770
Gain on write back of Majedie acquisition provision - 1,848
Realised profit/ (loss) on sale of financial assets 184
-
Unrealised profit/ (loss) on financial assets 838 618
Administration expenses 5 (188,932) (183,210)
Operating profit (1,849) 49,026
Interest receivable 1,337 358
Interest payable (67) (83)
(Loss)/ Profit before tax (579) 49,301
Taxation (2,911) (9,973)
(Loss)/ Profit for the year (3,490) 39,328
Other comprehensive income -
-
Total comprehensive income (3,490) 39,328
Pence Pence
Basic earnings per share 7 (5.46) 61.45
Diluted earnings per share 7 (5.46) 61.21
Consolidated Balance Sheet as at 31 March 2024
As at As at
31-Mar-24 31-Mar-23
Notes £'000 £'000
Assets
Non current assets
Intangible assets 48,472 90,629
Goodwill 32,110 38,586
Property, plant and equipment 3,719 3,378
Total non current assets 84,301 132,593
Current assets
Trade and other receivables 229,586 241,682
Financial assets 8,157 9,921
Cash and cash equivalents 104,318 121,037
Total current assets 342,061 372,640
Liabilities
Non current liabilities
Deferred tax liability (11,227) (21,493)
Lease liability (2,538) (2,168)
Total non current liabilities (13,765) (23,661)
Current liabilities
Trade and other payables (241,363) (255,460)
Corporation tax payable - (5,131)
Total current liabilities (241,363) (260,591)
Net current assets 100,698 112,049
Net assets 171,234 220,981
Shareholders' equity
Ordinary shares 648 648
Share premium - 112,510
Capital redemption reserve 19 19
Retained earnings 183,461 121,341
Own shares held (12,894) (13,537)
Total equity 171,234 220,981
Consolidated Cash Flow Statement
For the year ended 31 March 2024
Year ended Year ended
31-Mar-24 31-Mar-23
£'000 £'000
Cash flows from operating activities
Cash received from operations 178,771 236,362
Cash paid in respect of operations (134,636) (174,437)
Net cash generated from changes in unit trust receivables and payables 1,197 (1,387)
Net cash generated from operations 45,332 60,538
Interest received 1,432 358
Tax paid (18,558) (17,479)
Net cash generated from operating activities 28,206 43,417
Cash flows from investing activities
Purchase of property and equipment (142) (253)
Acquisition of Majedie net of cash acquired - 13,596
Gain on liquidation of Architas - 827
Loan to GAM (8,900) -
Loan repaid by GAM 8,900 -
Purchase of DBVAP Financial Asset (1,493) (2,701)
Sale DBVAP Financial Asset 4,348 -
Purchase of Seeding investments (328) (2,193)
Sale of Seeding investments 371 1,990
Net cash generated from investing activities 2,756 11,266
Cash flows from financing activities
Payment of lease liabilities (1,525) (1,328)
Purchase of own shares - (7,100)
Dividends paid (46,156) (46,070)
Net cash used in from financing activities (47,681) (54,498)
Net (decrease)/ increase in cash and cash equivalents* (16,719) 185
Opening cash and cash equivalents* 121,037 120,852
Closing cash and cash equivalents* 104,318 121,037
* Cash and cash equivalents consist only of cash balances.
Consolidated Statement of Change in Equity
For the year ended 31 March 2024
Share Share Capital Retained Own shares Total
capital premium redemption earnings held Equity
£ '000 £ '000 £ '000 £ '000 £ '000 £ '000
Balance at 1 April 2023 brought forward 648 112,510 19 121,341 (13,537) 220,981
Profit for the year - - - (3,490) - (3,490)
Total comprehensive income for the year - - - (3,490) - (3,490)
Dividends paid - - - (46,156) - (46,156)
Cancellation of share premium account - (112,510) - 112,510 - -
Purchase of own shares - - - - (381) (381)
Sale of own shares - - - - (1,024) 1,024 -
Members share incentive award exercises - - - (385) - (385)
Equity share options issued - - - 665 - 665
Balance at 31 March 2024 648 - 19 183,461 (12,894) 171,234
Consolidated Statement of Change in Equity
For the year ended 31 March 2023
Ordinary Share Capital Retained Own shares Total
shares premium redemption earnings held Equity
£ '000 £ '000 £ '000 £ '000 £ '000 £ '000
Balance at 1 April 2022 brought forward 612 64,370 19 128,859 (9,692) 184,168
Profit for the year - - - 39,328 - 39,328
Total comprehensive income for the year - - - 39,328 - 39,328
Dividends paid - - - (46,070) - (46,070)
Shares issued 36 48,140 - - - 48,176
Purchase of own shares - - - - (7,100) (7,100)
Sale of own shares - - - (2,692) 3,255 563
Equity share options issued - - - 1,916 - 1,916
Balance at 31 March 2023 648 112,510 19 121,341 (13,537) 220,981
Notes to the Financial Statements
1. Accounting policies
The Group's accounting policies are consistent with those set out in the
Annual Report and Accounts for the year ended 31 March 2023.
a) 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 Deferred Bonus and Variable Allocation Plan ('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 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.
b) 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 1k in the financial statements
for the year ended 31 March 2023) and share based payments (see note 1p in the
financial statements for the year ended 31 March 2023), neither of which are
considered to be significant. In addition, the Directors make estimates to
support the carrying value of goodwill and intangibles that arise on
acquisition.
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 2023).
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 and impairment. 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 10.
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 rate. In the current
period, significant estimates were only required for the intangible assets in
relation to Architas and Majedie (see notes 10 and 11 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 rate 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 10 and 11 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.
c) Regulatory capital position
31-Mar-24 31-Mar-23
£m £m
(re-presented)
Capital after regulatory deductions(1) 101.9 113.3
Regulatory capital requirement(2) 22.8 26.8
Surplus capital 79.1 86.5
Foreseeable dividends(3, 4) (31.9) (32.1)
Surplus capital after foreseeable dividends 47.2 54.4
Note, the capital position for the Group as at 31 March 2024 (audited)
includes the impairment of the intangible assets and goodwill.
(1) Group Capital minus own shares, intangibles and goodwill adjusted for
deferred tax liabilities
(2) For the financial year ended 31 March 2024, the Group Capital requirement
calculated per MiFIDPRU is estimated and will be finalised as part of the
September 2024 ICARA process
(3) For the financial year ended 31 March 2023, the Group Capital requirement
calculated per MiFIDPRU as part of the September 2023 ICARA process
(4) The Second interim dividend of 50.0 pence per share paid or to be paid in
August following the financial year end
The ICARA process included a review of the capital calculation shown above.
The Group had previously not adjusted the intangibles for related deferred tax
liabilities as part of the capital calculation believing it was more prudent
not to do so, however the review suggested it was market practice to deduct
them and so we have now done so. The figures for financial year ended 31 March
2023 have been similarly adjusted to give the correct comparable. The table
above shows the represented information.
2. Adjusted performance measures ("APMs")
ADJUSTED PROFIT BEFORE TAX
Definition: Profit before taxation, amortisation, 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
and impairment expenses, and costs associated with acquisitions, restructuring
and severance compensation related costs. 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:
1. Interest received/paid;
2. Taxation;
3. Amortisation of acquisition related intangible assets;
4. Impairment of acquisition related intangible assets and goodwill;
5. Expenses, including professional and other fees relating to
acquisitions and potential acquisitions;
6. All employee and member severance compensation related costs;
7. Significant reorganisation expenses related to systems and outsourced
services that enhance our target operating model; and
8. Other significant cash, and non-cash, non-recurring expenses.
Reconciliation: Note 6.
Reason for use: This is used to present a measure of operating profitability
of the Group which is aligned to the requirements of shareholders, potential
shareholders and financial analysts, and which removes the effects of
significant acquisitions, financing and capital investment, which eases the
comparison with the Group's competitors who may use different accounting
policies and financing methods.
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 Profit, identifying the operating
gearing within the business.
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.
PERFORMANCE FEE REVENUES
Definition: Revenue attributable to performance related fees.
Reconciliation: Note 4.
Reason for use: This is used to identify distinguish management fee revenues
from performance related fees from other revenues.
REVENUE EXCLUDING PERFORMANCE FEES
Definition: Revenue 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.
REVENUE MARGIN
Definition: Revenues excluding performance fees, less cost of sales divided by
the average AuMA.
Reason for use: This is used to present a measure of profitability over
average AuMA.
3. Segmental reporting
The Group operates only in one business segment - Investment
management.
Management offers different fund products through different distribution
channels. All key financial, business and strategic decisions are made
centrally by the Board, which determines the key performance indicators of the
Group. The Board reviews financial information presented at a Group level. The
Board, is therefore, the chief operating decision-maker for the Group. The
information used to allocate resources and assess performance is reviewed for
the Group as a whole. On this basis, the Group considers itself to be a
single-segment investment management business.
4. Gross profit
The Group's main source of revenue is management fees. Management fees are for
investment management or administrative services and are based on an agreed
percentage of the AuMA. Initial charges and commissions are for additional
administrative services at the beginning of a client relationship, as well as
ongoing administrative costs. Performance fees are earned from some funds
and/or segregated accounts when agreed performance conditions are met.
Year Year
ended ended
31-Mar-24 31-Mar-23
£'000 £'000
Revenue 187,480 224,855
Performance fee revenue 10,409 18,484
Total Revenue 197,889 243,339
Cost of sales (11,828) (13,569)
Gross Profit 186,061 229,770
Gross Profit excluding performance fee revenues 175,652 211,286
Average AuMA (£m) 28,330 33,815
Revenue Margin (%) 0.620% 0.625%
Total revenue from customers includes:
− Investment management on unit trusts, open-ended investment companies
sub-funds, portfolios and segregated accounts.
− 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-funds.
− 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.
− 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 fund auditor fees.
− Sales commission paid or payable.
− External investment advisory fees paid or payable.
Performance fee revenue:
Performance fee revenue includes some fees that are subject to arrangements
whereby fees are deferred from prior periods but are only recognised and
received following another period of outperformance. During the year £1.4
million of such fees were recognised. In future periods another £1.5 million
may be received. As there is no certainty that such deferred fees will be
collectable in future years, the Group's accounting policy is to include
performance fees in income only when they become due and collectable and
therefore the element (if any) deferred beyond 31 March 2024 has not been
recognised in the results for the year.
5. Administration expenses
Year ended Year ended 31-Mar-24 Year Year ended 31-Mar-23 Year ended 31-Mar-23 Year ended 31-Mar-23
31-Mar-24
£'000 £'000 ended £'000 £'000 £'000
Fixed Variable 31-Mar-24 Fixed Variable Total
Staff related expenses
Wages and salaries 32,324 30,178
Fund management 4,019 6,045 10,064 5,109 2,963 8,072
Other staff 17,876 4,384 22,260 16,559 5,547 22,106
Social security costs 2,613 4,105
Fund management 331 - 331 1,300 - 1,300
Other staff 2,282 - 2,282 2,805 - 2,805
Pension costs 2,502 2,388
Fund management 457 - 457 442 - 442
Other staff 2,045 - 2,045 1,946 - 1,946
Share incentivisation expense 1,271 2,354
All staff - 1,271 1,271 - 2,354 2,354
DBVAP expense 2,953 2,777
All staff - 2,953 2,953 - 2,777 2,777
Severance compensation 3,198 3,995
44,861 45,797
Member related expenses
Members' drawings charged as an expense 36,445 59,507
Fund management 3,328 29,180 32,508 14,449 35,359 49,808
Other members 2,393 1,544 3,937 5,501 4,198 9,699
Share incentivisation expense 1,040 1,225
All members - 1,040 1,040 - 1,225 1,225
Professional services(1) 15,652 8,026
Intangible asset amortisation 12,094 14,793
Intangible asset and Goodwill impairment 37,065 12,816
Depreciation 1,975 3,883
Other administration expenses 39,800 37,163
Total administration expenses 188,932 183,210
(1) Includes acquisition related and restructuring costs for past
acquisitions, see table below for a detailed breakdown:
Year ended 31-Mar-24 Year ended 31-Mar-23
£'000 £'000
Total Total
GAM acquisition related costs 9,508 1,540
Neptune/Architas/Majedie acquisition related costs 559 5,868
Significant costs relating to target operating model restructure 5,585 618
Total Professional services 15,652 8,026
Note, acquisition related costs relate primarily to corporate finance,
sponsor, due diligence, target operating model design, Class 1 circular (as
applicable) and Swiss public offer (as applicable); and legal expenses.
6. Adjusted profit before tax
Adjusted profit before tax is disclosed in order to give shareholders an
indication of the profitability of the Group which removes the effect of
non-cash (intangible asset amortisation and impairment) expenses and
non-recurring (acquisition, restructuring and severance compensation related)
expenses ("Adjustments") and is reconciled in the table below.
Year ended Year ended
31-Mar-24 31-Mar-23
£'000 £'000
(Loss)/profit before tax (579) 49,301
Write back of Majedie acquisition provision (1,848)
-
Severance compensation and staff reorganisation costs(1) 3,198 3,995
Professional services(2) 15,652 8,026
Amortisation of intangible asset 12,094 14,793
Impairment of intangible asset and goodwill 37,065 12,816
Adjustments 68,009 37,782
Adjusted profit before tax 67,430 87,083
Interest receivable (1,337) (358)
Adjusted operating profit 66,093 86,725
Adjusted diluted earnings per share(3) 79.15 109.78
Adjusted diluted earnings per share (exc. performance fees)(3, 4) 74.80 100.98
(1) Staff redundancy, severance compensation and related legal expenses in
relation to a cost reduction programme and acquisitions
(2) See footnote (1) in Note 5
(3) Taxation rate of 25% (2023: 19%)
(4) Performance fee revenues contribution calculated in line with operating
margin of 36% (2023: 38%)
7. Earnings per share
The calculation of basic earnings per share is based on profit after taxation
for the year. Shares held by the Liontrust Asset Management Employee Trust are
not eligible for dividends and are treated as cancelled for the purposes of
calculating earnings per
share.
Diluted earnings per share are calculated on the same bases as set out above,
after adjusting the weighted average number of Ordinary Shares for the effect
of options to subscribe for new Ordinary Shares or Ordinary Shares held in the
Liontrust Asset Management Employee Trust that were in existence during the
year ended 31 March 2024. This is reconciled to the actual weighted number of
Ordinary Shares as follows:
As at As at
31-Mar-24 31-Mar-23
number number
Weighted average number of Ordinary Shares 63,875,440 63,998,999
Weighted average number of dilutive Ordinary shares under option:
- to the Liontrust Long Term Incentive Plan 22,911 247,003
- to the Liontrust Option Plan - 4,559
Adjusted weighted average number of Ordinary Shares 63,898,351 64,250,561
8. Goodwill
Goodwill is allocated to the 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. For all four CGUs, 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 discount rate and net AuMA growth rate. In addition, the
model uses a terminal growth rate of 2%. The projected cash flows used within
the goodwill model is based on a 5-year period where the terminal growth is
used for years beyond that, and forecasts have been approved by senior
management. The discount rate was derived from the Group's weighted average
cost of capital and takes into account the weighted average cost of capital of
other market participants. The net AuMA growth rate is a combination of three
variables: AUM market growth rate, fund flows and fund attrition. The net AuMA
growth rate is determined by using historical actual experience and external
sources to estimate future growth based on historic equities/bonds
performances. In addition, the terminal growth rate is also based on external
sources too and based on long term inflation expectations. See table below for
details.
Goodwill 2024 Goodwill 2023 Discount Rate 2024 Discount Rate 2023 Terminal Growth Rate 2024 Terminal Growth Rate 2023 Net AuMA Net AuMA
Growth Rate 2024
Growth Rate 2023
£'000 £'000
ATI 11,873 11,873 13.00% 13.80% 2% 2% 4.50% 7%
Neptune 7,668 7,753 13.00% 13.80% 2% 2% 7.30% 5.50%
Architas 7,951 7,951 13.00% 13.80% 2% 2% 0.30% 0.20%
Majedie 4,618 11,009 13.00% 13.80% 2% 2% 3.50% 3.50%
Total 32,110 38,586
For ATI and Neptune, there were no indicators of impairment. There were
indicators of impairment for both Architas and Majedie as a result of an
increase in net outflows which led to actual revenues being lower than
originally forecast. Based on key assumptions in the table, the Architas
recoverable amount was £35.2m and the headroom above impairment was £5.5m.
For Majedie, the value of the Goodwill have been tested for FY24 which has
resulted in a higher carrying value than value in use hence an impairment of
£6.389 million (2023: £nil).
Sensitivity analysis was carried out on the Architas and Majedie Goodwill
models to assess the impact of reasonable plausible downside scenarios on the
discount rate and the AuMA effective growth rate assumptions. In relation to
Architas sensitivity, changing the discount rate from 13% to 13.4% and net
AuMA growth rate from 0.3% to -1.1% would lead to a reduction of £1,231k and
£1,660k respectively on the headroom and no impairment to Goodwill for both
changes. The cumulative impact of the change in discount rate and decrease net
AuMA growth rate would lead to decrease in headroom by £2,816k. For Majedie
Goodwill (Funds and Segregated Clients combined) the discount rate being
changed from 13% to 13.4% and the net AuMA growth rate from 2.2% to 0.8% leads
to the further impairment of Goodwill by £329k and £305k respectively. The
cumulative impact of the change in discount rate and decrease net AuMA growth
rate leads to a £614k increase in impairment. Within our reasonable plausible
downside, we do not consider the impact of investor sentiment on ESG factors
from the climate targets detailed within the responsible capitalism on page 62
to be a material risk in the medium and long term to our recoverable amount
and therefore have not considered these risks in the reasonable plausible
downside scenarios.
31-Mar-23 Goodwill impairment recognised in the period 31-Mar-24
£'000 £'000 £'000
ATI - Sustainable investment team 11,873 - 11,873
Neptune - Global Equity team* 7,753 - 7,668
Architas - Multi-Asset team 7,951 - 7,951
Majedie - Global Fundamental team 11,009 (6,391) 4,618
38,586 (6,391) 32,110
*There is a movement of £85,000 which does not relate to an impairment of
Goodwill but a fair value adjustment of the initial Goodwill value.
9. Intangible Assets
The Group recognises five intangible assets relating to investment management
contracts and segregated clients arising on business acquisitions. An
assessment is made at each reporting date, on a standalone basis for each
intangible asset, as to whether there is any indication that an 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. The valuation models used the
same assumptions excluding new business assumption as those in the goodwill
impairment review detailed in note 14. The assessment made at 31 March 2024
did not indicate any indicators of impairment in the value of the ATI or
Neptune intangible assets.
For Majedie, indicators of impairment were identified for both the investment
management contracts and segregated clients intangible assets as at 31 March
2024 due to higher than expected fund outflows leading to actual revenues
being lower than originally forecast. The value of the intangible assets have
therefore been tested for FY24 which has resulted in a higher carrying value
than value in use hence an impairment of the Majedie investment management
contract intangible of £16.537 million and Majedie Segregated Clients
intangible of £6.828 million. For Architas, indicators of impairment were
identified 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 tested for at half year and
end of FY24 which at half year has resulted in a higher carrying value than
value in use hence an impairment of the Architas investment management
contract intangible of £7.311 million. There was no further impairment and
headroom increase during year end due to changes in certain inputs including
lower discount rate and higher market growth rates.
For Architas, indicators of impairment were identified due to higher than
expected fund outflows leading to actual revenue being lower than originally
forecast. The value of the intangible assets have therefore been tested for at
half year and end of FY24 which at half year has resulted in a higher carrying
value than value in use hence an impairment of the Architas investment
management contract intangible of £7.311 million (2023: £8.800 million).
There was no further impairment and headroom increased during year end due to
changes in certain inputs including lower discount rate and higher market
growth rates however, no impairment reversal has been recognised due to
continued net outflows from the underlying funds. Management continues to
monitor the performance of the asset. In 2023, Architas was impaired due to
higher than expected fund outflows and negative market returns leading to
actual revenues being lower than originally forecast.
As at 31 March 2024
Description Carrying value Remaining
£'000
amortisation
period
Investment management contracts acquired as part of ATI acquisition 3,600 3 Years
Investment management contracts acquired as part of Neptune acquisition 17,185 5½ Years
Investment management contracts acquired as part of Architas acquisition 21,674 6½ Years
Investment management contracts acquired as part of Majedie acquisition - 2,476 8 Years
Funds
Investment management contracts acquired as part of Majedie acquisition - 3,537 3 Years
Segregated
Investment management contracts 2024 Segregated Clients 2024 Total 2024 Investment management contracts 2023 Segregated Clients 2023 Total 2023
£'000 £'000 £'000 £'000 £'000 £'000
Cost
Balance as at 1 April 142,169 16,010 158,179 115,113 - 115,113
Additions: -
Additions arising on acquisition of Majedie - - - 27,056 16,010 43,066
Balance as at 31 March 142,169 16,010 158,179 142,169 16,010 158,179
Accumulated amortisation and impairment
Balance as at 1 April 64,348 3,202 67,550 39,942 - 39,942
Amortisation for the year 9,037 2,443 11,480 11,590 3,202 14,792
Impairment for the year 23,849 6,828 30,677 12,816 - 12,816
Balance as at 31 March 97,234 12,473 109,707 64,348 3,202 67,550
Net Book Value £'000
As at 31 March 2024 48,472
As at 31 March 2023 90,629
As at 31 March 2022 75,171
Sensitivity analysis was carried out on the Architas and Majedie models to
assess the impact of reasonable plausible downside scenarios on both the
discount rate, and the net AuMA growth rate assumptions. In relation to
Architas sensitivity, changing the discount rate from 13% to 13.4% leads to
£266k reduction in headroom but no impairment and changing the net AuMA
growth rate from 0.6% to -0.8% leads to £1,081k reduction in headroom but no
impairment. The cumulative impact of the change in discount rate and decrease
net AuMA growth rate leads to £1,331k reduction in headroom but no
impairment.
For Majedie the discount rate sensitivity applied is consistent with Architas
(13% to 13.4%) leading to an increase in impairment of £49k. Decreasing the
net AuMA growth rate from 3.1% to 2.2% for the Majedie would lead to an
increase in impairment of £206k. The cumulative impact of the change in
discount rate and decrease net AuMA growth rate would lead to an increase in
impairment of £252k.
Within our reasonable plausible downside, we have considered the impact of
investor sentiment on ESG factors from the climate targets detailed within the
responsible capitalism section of the Annual report which Liontrust have
determined not to be a significant risk over the medium-long term.
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:
a) Level 1 fair value measurements are those derived from quoted prices
(unadjusted) in active markets for identical assets and liabilities;
b) Level 2 fair value measurements are those derived from inputs other
than quoted prices included within level 1 that are observable for the asset
or liability, either directly (i.e. as prices) or indirectly (i.e. derived
from prices); and
c) Level 3 fair value measurements are those derived from valuation
techniques that include inputs for the asset or liability that are not based
on observable market data.
As at the balance sheet date all financial assets are categorised as Level 1.
Assets held at fair value through profit and loss: the Group's financial
assets represent shares in the Liontrust GF Strategic Bond Fund, the Liontrust
GF European Smaller Companies Fund, the Liontrust GF European Strategic Equity
Fund, and the Liontrust GF UK Growth Fund (all sub-funds of Liontrust Global
Funds PLC) and are valued at bid price); and units in the Liontrust UK Growth
Fund.
11. Contingent assets and liabilities
The Group can earn performance fees on some of the segregated and fund
accounts that it manages. In some cases a proportion of the fee earned is
deferred until the next performance fee is payable or offset against future
underperformance on that account. As there is no certainty that such deferred
fees will be collectable in future years, the Group's accounting policy is to
include performance fees in income only when they become due and collectable
and therefore the element (if any) deferred beyond 31 March 2024 has not been
recognised in the results for the year.
12. Key risks
The Directors have identified the risks and uncertainties that affect the
Group's business and believe that they are substantially the same for this
year as the current risks as identified in the 2023 Annual Report and
Accounts. These can be broken down into risks that are within the
management's influence and risks that are outside it.
Risks that are within management's influence include areas such as the
expansion of the business, prolonged periods of underperformance, 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.
13. Directors' responsibility statement
To the best of their knowledge and belief, the Directors confirm that:
The financial statements, prepared in accordance with the applicable set of
accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the company and the undertakings
included in the consolidation taken as a whole; and the strategic report
includes a fair review of the development and performance of the business and
the position of the issuer and the undertakings included in the consolidation
taken as a whole, together with a description of the principal risks and
uncertainties that they face.
We consider the annual report and accounts, taken as a whole, is fair,
balanced and understandable and provides the information necessary for
shareholders to assess the group's position and performance, business model
and strategy.
The announcement includes a fair summary of the development and performance of
the business and the position of Liontrust Asset Management Plc and the
undertakings included in the consolidation taken as a whole and a description
of the principal risks and uncertainties that they face.
Forward Looking Statements
This Full Year Results announcement contains certain forward-looking
statements with respect to the financial condition, results of operations and
businesses and plans of the Group. These statements and forecasts involve risk
and uncertainty because they relate to events and depend upon circumstances
that have not yet occurred. There are a number of factors that could cause
actual results or developments to differ materially from those expressed or
implied by these forward-looking statements and forecasts. As a result, the
Group's actual future financial condition, results of operations and business
and plans may differ materially from the plans, goals and expectations
expressed or implied by these forward-looking statements. Liontrust
undertakes no obligation publicly to update or revise forward-looking
statements, except as may be required by applicable law and regulation
(including the Listing Rules of the Financial Conduct Authority). Nothing in
this announcement should be construed as a profit forecast or be relied upon
as a guide to future performance.
The 2024 Annual Report and Accounts is expected to be posted to shareholders
on or around 8 July 2024.
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.
Shareholder services
Equiniti Limited, our registrar, may be able to provide you with a range of
services relating to your shareholding. If you have questions about your
shareholding or dividend payments, please contact Equiniti Limited by calling
+44 (0) 371 384 2030 or visit www.shareview.co.uk
(https://eur03.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.shareview.co.uk%2F&data=05%7C01%7CTony.Morrison%40liontrust.co.uk%7C684298d6278541abaa0308db70bbb16c%7C4e6acae25b334cf78f09842c7aba2f0f%7C0%7C0%7C638227723653350034%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=JUCRMg%2F7gXu3tpBCyQDwSmgkgBTCVj7OVQHN3vc10zw%3D&reserved=0)
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