REG - Liontrust Asset Mgmt - Final Results
21/06/2023 07:00
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RNS Number : 3607D Liontrust Asset Management PLC 21 June 2023
LEI: 549300XVXU6S7PLCL855
For immediate release
21 June
2023
LIONTRUST ASSET MANAGEMENT PLC
FULL YEAR RESULTS FOR THE YEAR ENDED 31 MARCH 2023
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 2023.
Results:
· Adjusted profit before tax of £87.1 million (2022: £96.6 million),
a decrease of 10%.
· Adjusted diluted earnings per share of 109.8 pence per share (2022:
127.6 pence per share), a decrease of 14%.
· Profit before tax of £49.3 million (2022: £79.3 million), a
decrease of 38%, see note 5 below for a reconciliation to Adjusted profit
before tax.
· Gross Profit of £230 million (2022: £231 million), includes £18.5
million of performance fee revenues (2022: £12.6 million).
Dividend:
· Second interim dividend of 50.0 pence per share (2022: 50.0 pence).
This brings the total dividend for the financial year ending 31 March 2023 to
72.0 pence per share (2022: 72.0 pence).
Assets under management and advice:
· On 31 March 2023, assets under management and advice ("AuMA") were
£31.4 billion (2022: £33.5 billion), a decrease of 6%.
· AuMA as at 16 June 2023 were £30.5 billion.
Flows:
· Net outflows of £4.8 billion in the financial year ended 31 March
2023 (2022: £2.5 billion inflow).
Commenting, John Ions, Chief Executive, said:
"We are focused on ensuring the future growth of Liontrust. The business is in
strong health despite the challenges of the past year and we are seeking to
build on this through the proposed acquisition of GAM Holding AG ("GAM") to
accelerate the strategic aims of Liontrust becoming a specialist global
investment manager.
This will provide greater scale and investment and distribution capability for
the benefit of clients and shareholders of both businesses. The financial
strength of Liontrust, reflected in maintaining the dividend at 72 pence a
share for the full year, will help us to achieve these objectives.
The historic growth of Liontrust has been based on investment teams with
rigorous and repeatable processes, strong client relationships, excellent
communications, a powerful brand, risk management and a robust infrastructure
to support expansion. These will continue to be the drivers of the business
and are why we are optimistic about the future of Liontrust.
Our investment teams have strong long-term performance based on their distinct
investment processes. Such rigorous processes have never been more important
given the need to help clients navigate the current political, economic and
market environments. While performance can never be predictable, processes
must be. Confidence about investment processes provides belief for the long
term despite periods of underperformance, which we have seen for some of our
teams over the last year.
The sales and marketing teams have ensured that client relationships,
communications and service remain strong, both in person and digitally,
leading to good engagement. Liontrust's brand is strong in the UK and has been
gaining awareness in parts of Europe. This includes being seen as leaders in
sustainable investment and UK equities in the UK (source: Research in
Finance).
While outflows have continued into the current financial year, I am confident
we are continuing to do the right things and the dedication and commitment of
everyone at Liontrust will reap its rewards in the future.
The proposed acquisition of GAM will help us achieve our strategic objectives
through the global distribution footprint, expansion of asset classes,
processes and investment capability, and the combined business infrastructure.
The collective scale of and expertise across the enlarged group will provide
financial stability and certainty to GAM's clients and shareholders. Combining
the two businesses will give a stronger platform for future growth that will
benefit clients, shareholders and employees of both Liontrust and GAM. This is
shown by GAM's investment managers publicly endorsing the proposed acquisition
by Liontrust.
Vinay Abrol and I have met GAM's investment managers distribution teams and
other employees in the UK, Zurich, Madrid, Milan and New York and have been
extremely impressed by their commitment and the capability they will bring to
the enlarged group. Liontrust has a successful track record of integrating
acquisitions quickly and efficiently and we are confident of achieving the
same with this acquisition which will result in Zurich becoming Liontrust's
headquarters for continental Europe.
Growing a business is never a smooth line upwards as we have seen recently.
The opportunities for Liontrust are clear, however, and we are confident that
we have the investment capability, distribution, brand, business processes and
commitment to take advantage of them."
For further information please contact:
Teneo (Tel: 020 7353 4200, Email: liontrust@teneo.com)
Tom Murray or Stephanie Mackrell
Liontrust Asset Management Plc (Tel: 020 7412 1700, Website: liontrust.co.uk)
John Ions: Chief Executive
Vinay Abrol: Chief Financial Officer & Chief Operating Officer
Simon Hildrey: Chief Marketing Officer
David Boyle: Head of Corporate Development
Singer Capital Markets (Tel: 020 7496 3000)
Corporate Broking: Tom Salvesen
Corporate Finance: Justin McKeegan
Panmure Gordon (Tel: 020 7886 2500)
Corporate Broking: David Watkins
Corporate Advisory: Atholl Tweedie
Chair's Statement
Introduction
As a Board, we are wholly focused on the long-term objectives of your Company
and the interests of shareholders, clients and colleagues. We are convinced
the business has the right strategy to generate sustained growth over the
longer term and the management team to implement it. While the last year has
been challenging for the business, in terms of both performance and net sales,
the Group is financially robust, and our belief in the effectiveness of the
investment teams' processes and the Distribution team's ability to generate
growth for the business is steadfast. Our confidence in the financial strength
of Liontrust has allowed us to maintain the full-year dividend at 72.0 pence
per share.
Strategic overview
At the heart of what Liontrust stands for are the rigorous and distinct
processes of each of the investment teams. Remaining true to and focused on
these processes, even when the economic and market environment is against
them, has enabled the teams to deliver for their clients over the long term.
The Board has been impressed by the continued strength of the teams'
convictions in their individual processes over the past year and this gives us
confidence that Liontrust will achieve the strategic aim of delivering market
leading investment performance over the longer term. We have full confidence
in Liontrust's sales and marketing strategy; and its ability to deliver our
strategic aims of expanding distribution and our client base whilst also
enhancing the investor experience. The engagement that is being generated
through events, webinars and content demonstrates the breadth of coverage of
our distribution.
While the year has been difficult with net outflows of £4.84 billion, the
continuing strength of distribution and investor engagement is reflected in
the relatively strong gross sales that the Company has been generating. Over
the 2022 calendar year and in the fourth quarter of 2022, Liontrust had the
seventh largest gross retail sales in the UK, according to the Pridham Report,
despite UK equity strategies continuing to be out of favour with investors.
The Board appreciates the trust that clients put in Liontrust and the
investment teams, and we do not take this loyalty for granted. The proposed
acquisition of GAM Holding AG presents a significant opportunity for us as a
Group to enhance our investment capability, physical distribution and the
service we provide clients; it will accelerate progress against our seven
strategic pillars and enable the Group to become a global asset manager.
While Liontrust has established a strong brand in the UK, acquiring GAM will
give us the foundations to replicate this internationally through its global
footprint. The Board believes in the value that Liontrust and GAM can bring to
each other, and to our respective clients and shareholders. Liontrust has made
what we believe is a good offer for GAM and a compelling case for why the
acquisition works for all parties.
Delivering our responsibilities
We are committed to serving our clients and have always taken our
responsibility as managers of investors' savings very seriously. Client
support and understanding has come under increased focus in the UK with the
introduction of the FCA's Consumer Duty and Liontrust believes we are well
positioned to show how we are delivering the outcomes expected under this new
standard.
The Board is committed to ensuring that Responsible Capitalism is integral to
Liontrust's overall strategy and that this resonates throughout the business
and any future acquisitions. Responsible Capitalism covers both Liontrust's
operations and investments.
From an operational perspective, Liontrust is committed to understanding and
managing well its key risks and opportunities, which include attracting and
retaining talent, preventing internal fraud, managing cyber security, and
keeping up to date with legislative changes. We are furthering, where
possible, the integration of ESG considerations into our investment processes,
practicing effective stewardship and evidencing and reporting on this work on
a regular basis.
Liontrust is a member and supporter of the Net Zero Asset Manager's Initiative
and also committed to achieving net zero greenhouse gas emissions by 2050
across our own business and investments. Liontrust is also currently working
to understand its own, operational, impacts from a biodiversity perspective as
well as the impact in this area of the investments it makes on behalf of
clients.
We report on these all activities and our progress in this area in the
Liontrust Responsible Capitalism report that was published in April this year.
Of equal importance is our commitment is to our employees and members, and one
of our seven strategic pillars is to attract and develop talent. The Group is
focused on offering all staff development opportunities, good benefits and an
environment in which they can flourish. This year, we continued to strengthen
our leadership team, both through new hires and investing in a formal
development programme to promote our leaders and develop consistent leadership
capability for 2023 and beyond. The programme is not limited to Heads of
Department and will be rolled out further in the coming year, giving
development opportunities to a wide group of employees.
We are pleased that our annual workforce engagement survey had a greater
participation rate of 82% this year against 79% last year. Based on feedback
from our survey provider, this is higher than industry averages, which are in
the mid-60s. As participation is a proxy for engagement, this is a positive
result. By delivering policies based on colleagues' feedback, Liontrust
continues to offer an attractive working environment. Liontrust is also
committed to diversity and inclusion, which is an ongoing objective and one
where we are continuing to make progress. The Diversity and Inclusion
Committee chaired by our CFO/COO has been instrumental in organising events
through Pride, Black History Month and around International Women's Day in
March. The Committee has also organised training for all colleagues, which
goes towards creating an inclusive culture where colleagues can flourish. I
can see this supported by the survey results, in which 92% of colleagues
agreed 'I feel like I can be myself at Liontrust'.
Liontrust has not stood still over the past year, and I want to thank all our
colleagues for their hard work and dedication over the period.
Board changes
The Board has reflected deeply on the way it carries out its role. We are
aware that the behaviours we display, individually as directors and
collectively as a Board, sets the tone from the top. The boardroom is a place
for robust debate and constructive challenge which, together with support,
diversity of thought and teamwork, are essential features for the operation of
an effective Board.
In March, two Non-Executive Directors tendered their resignations from the
Board. While their departure is regrettable, the Board is satisfied that it
continues to meet those essential features of an effective board.
I have set out in my Nomination Report our carefully considered succession
plans. We are seeking to balance speed of change, both for the Board and the
Group, with continuity and a careful and diligent selection process is in
place to ensure that new appointments are the right cultural fit for the Board
and Company.
Results
Adjusted profit before tax is £87.083 million (2022: £96.556 million), a
decrease of 10% compared to last year. Adjusted profit before tax 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 5 below for a
reconciliation of adjusted profit before tax.
Dividend
The Board has declared a second interim dividend of 50.0 pence per share
(2022: 50.0 pence) bringing the total dividend for the financial year ending
31 March 2023 to 72.0 pence per share (2022: 72.0 pence per share).
The second interim dividend will be payable on 4 August 2023 to shareholders
who are on the register as at 30 June 2023, the shares going ex-dividend on 29
June 2023. Last day for Dividend Reinvestment Plan elections is 14 July 2023.
Looking forward
Despite the challenges of the past year, there has been continued progress in
ensuring that Liontrust can generate sustained growth in the future. We have
belief in our investment teams and their processes delivering for our clients.
And we will continue to focus on our strategy in which we have full
confidence.
Alastair Barbour
Non-executive Chair
20 June 2023
Chief Executive's Report
Introduction
The role of asset managers has never been more important. Investors are
seeking to secure their financial futures at a time of having to navigate
higher inflation, rising interest rates, political instability and
fragmentation in globalisation. While cash has been seen by many people as an
attractive home for their savings in recent months, this will not deliver the
real returns to enable them to achieve their long-term objectives.
We believe these long-term financial objectives are best achieved through the
application of robust investment processes. This is despite the inevitable
periods when active managers underperform and sentiment is negative about
particular markets and asset classes.
As I highlighted in last year's Annual Report and Accounts, the rotation from
quality growth to value stocks had started to impact the performance of many
of our funds. While this has continued over the past year, I am proud of the
proven long-term track record of our teams and their processes. This includes
the Sustainable Investment team, who have delivered strong returns following
previous periods of relative underperformance. The compelling case for
sustainable investment and finding companies that will drive and benefit from
the transition to a cleaner, healthier and safer world has only been
strengthened, not lessened, by the events of the past year.
Our confidence is shown by the fact we are launching the Liontrust GF
Sustainable Future US Growth Fund in July. This will enable investors to take
advantage of the growing number of sustainable opportunities in the world's
largest stock market, particularly among mid cap stocks.
The economic and market environment also does not detract from the strength of
the Liontrust business.
Over the past decade, we have been building an asset manager with excellent
investment capability across our now seven investment teams. For example,
Edinburgh Investment Trust ("EIT") reached the three-year anniversary of being
managed by James de Uphaugh in March with strong relative performance and a
narrowing of the discount over that period. Liontrust has worked with the
board of EIT on creating a brand and is now marketing EIT to both professional
advisers and retail investors.
Our sales and marketing teams have continued to regularly interact with
clients, whether through face-to-face meetings, events, webinars, videos or
written communications. This is reflected in impressive engagement such as 553
professional advisers watching our virtual Sustainable Investment conference
live, more than 500,000 views of our videos, a 19% increase in page views on
the Liontrust website over the past year, and 85,000 clicks on our brand
advertising. Liontrust has been named as the 6th strongest asset management
brand in the UK by Broadridge.
Proposed acquisition of GAM Holding AG
The importance of our strategic objectives of (i) Expanding distribution and
our client base and (ii) Diversifying our fund range has been clearly
demonstrated over the past year. The diversification in asset classes and a
more international distribution footprint are two of the principal reasons why
we have agreed the proposed acquisition of GAM Holding AG ("GAM").
The expanded range of funds will offer the potential to grow AuMA through
marketing new funds to existing clients, attract new clients and exploit new
distribution channels in markets where Liontrust and GAM have strength of
distribution. It will also provide the opportunity to grow distribution in
markets where there is currently little or a developing presence.
The expanded number of asset classes and styles of investment, led by highly
regarded fund managers, will also enable us to reduce the correlation of
returns across the range and therefore increase the number of funds that will
be attractive to clients during different periods of the market cycle. This
will provide an investment proposition that ensures Liontrust can sustain
growth even when certain styles of investment are out of favour with
investors.
The positive responses of the GAM investment teams and clients to the proposed
acquisition reflects the stability and certainty of leadership that Liontrust
will provide. We have shown that integrating businesses which need support
into the Liontrust operating model leads to a stronger enlarged group. The
financial strength of Liontrust enables us to achieve these acquisitions which
in turn accelerate our strategic objectives.
Outlook
I am pleased with the development of the business and the foundations that
have been put in place for future growth even if the past year has been more
challenging in terms of net flows.
The investment teams and their processes have proven themselves over the long
term. The Sustainable Investment and Economic Advantage teams are regarded as
market leaders in the UK and we have been diversifying sales across other
teams and funds. Our brand is strong and we have great reach through our sales
and marketing.
Liontrust is financially strong and we have been investing in digital
marketing, performance data and the infrastructure of the business to enhance
our engagement with clients, the investor experience and support growth.
The proposed acquisition of GAM gives us the opportunity to accelerate
Liontrust's strategic development by expanding the product range, the physical
footprint of our distribution and talent across the company.
It is for all these reasons that I look forward with confidence to the future
development of Liontrust.
John Ions
Chief Executive
20 June 2023
Assets under management and advice
On 31 March 2023, our AuMA stood at £31,430 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 11,210 347 - 10,286 - 577
Economic Advantage 7,896 430 - 7,242 - 224
Multi-Asset 5,052 - - 4,810 242 -
Global Innovation 619 - - 619 - -
Cashflow Solution 1,437 543 - 747 140 7
Global Fundamental 4,855 1,074 1,139 1,886 702 54
Global Fixed Income 361 - - 131 - 230
Total 31,430 2,394 1,139 25,721 1,084 1,092
AuMA as at 16 June 2023 were £30,526 million.
Flows
The net outflows over the Financial Year were £4,841 million(1) (2022: net
inflows £2,488 million). A reconciliation of fund flows and AuMA over the
Financial Year 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 2022 33,548 1,408 - 30,113 370 1,657
Net flows(1) (4,841) (1,148) (89) (3,185) 274 (693)
Market and Investment performance (2,425) (177) (11) (2,085) 45 (197)
Majedie acquisition 5,148 2,311 1,239 878 395 325
Closing AuMA - 31 March 2023 31,430 2,394 1,139 25,721 1,084 1,092
(1) Includes £608 million related to the termination of a life company
advisory agreement for the Multi Asset team and £149 million related to the
termination of the agreement with Majedie Investments Plc (as at 31 January
2023) for the Global Fundamental team.
Extract from the 2023 Annual Report and Accounts - Liontrust's seven principal
strategic objectives
Pillar 1 - Be a responsible company and investor
Pillar 2 - Deliver market leading performance over the longer term
Pillar 3 - Diversify the fund range
Pillar 4 - Expand the distribution and the client base
Pillar 5 - Enhance the investor experience
Pillar 6 - Attract and develop talent
Pillar 7 - Develop the business infrastructure to help drive growth
Consolidated Statement of Comprehensive Income for the year ended 31 March
2023
Year Year
ended ended
31-Mar-23 31-Mar-22
Note £'000 £'000
Revenue 3 243,339 245,571
Cost of sales 3 (13,569) (14,252)
Gross profit 229,770 231,319
Gain on Majedie acquisition provision 1,848 -
Unrealised gain on financial assets 618 26
Administration expenses 4 (183,210) (151,916)
Operating profit 49,026 79,429
Interest receivable 358 4
Interest payable (83) (142)
Profit before tax 49,301 79,291
Taxation (9,973) (20,088)
Profit for the year 39,328 59,203
Total comprehensive income 39,328 59,203
Pence Pence
Earnings per share
Basic earnings per share 6 61.45 97.65
Diluted earnings per share 6 61.21 97.61
Consolidated Balance Sheet as at 31 March 2023
As at As at
31-Mar-23 31-Mar-22
£'000 £'000
Assets
Non current assets
Intangible assets 90,629 75,171
Goodwill 38,586 27,577
Property, plant and equipment 3,378 3,658
Total non current assets 132,593 106,406
Current assets
Trade and other receivables 241,682 235,496
Financial assets 9,921 4,168
Cash and cash equivalents 121,037 120,852
Total current assets 372,640 360,516
Liabilities
Non current liabilities
Deferred tax liability (21,493) (16,601)
Lease liability (2,168) (2,775)
Total non current liabilities (23,661) (19,376)
Current liabilities
Trade and other payables (255,460) (255,669)
Corporation tax payable (5,131) (7,709)
Total current liabilities (260,591) (263,378)
Net current assets 112,049 97,138
Net assets 220,981 184,168
Shareholders' equity
Ordinary shares 648 612
Share premium 112,510 64,370
Capital redemption reserve 19 19
Retained earnings 121,341 128,859
Own shares held (13,537) (9,692)
Total equity 220,981 184,168
Consolidated Cash Flow Statement
For the year ended 31 March 2023
Year Year
ended ended
31-Mar-23 31-Mar-22
£'000 £'000
Cash flows from operating activities
Cash received from operations 236,362 219,544
Cash paid in respect of operations (174,437) (112,949)
Net cash generated from changes in unit trust receivables and payables (1,387) (508)
Net cash generated from operations 60,538 106,087
Interest received 358 4
Tax paid (17,479) (12,500)
Net cash generated from operating activities 43,417 93,591
Cash flows from investing activities
Purchase of property and equipment (253) (507)
Acquisition of Majedie net of cash acquired 13,596 -
Gain on liquidation of subsidiary 827 -
Purchase of DBVAP Financial Asset (2,701) (3,125)
Sale DBVAP Financial Asset - 1,183
Purchase of Seeding investments (2,193) (170)
Sale of Seeding investments 1,990 84
Net cash from/(used in) investing activities 11,266 (2,535)
Cash flows from financing activities
Payment of lease liabilities (1,328) (1,889)
Purchase of own shares (7,100) (5,000)
Dividends paid (46,070) (35,213)
Net cash used in financing activities (54,498) (42,102)
Net increase in cash and cash equivalents 185 48,954
Opening cash and cash equivalents 120,852 71,898
Closing cash and cash equivalents 121,037 120,852
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
Consolidated Statement of Change in Equity
For the year ended 31 March 2022
Ordinary Share Capital Retained Own shares Total
shares premium redemption earnings held Equity
£ '000 £ '000 £ '000 £ '000 £ '000 £ '000
Balance at 1 April 2021 brought forward 610 64,370 19 104,207 (5,818) 163,388
Profit for the year - - - 59,203 - 59,203
Total comprehensive income for the year - - - 59,203 - 59,203
Dividends paid - - - (35,947) - (35,947)
Shares issued 2 - - (2) - -
Purchase of own shares - - - - (5,000) (5,000)
Sale of own shares - - - (1,042) 1,126 84
Equity share options issued - - - 2,440 - 2,440
Balance at 31 March 2022 612 64,370 19 128,859 (9,692) 184,168
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 2022.
a) Alternative Performance Measures
The Group used Alternative Performance Measures ('APMs') to present the
performance of the Group in a consistent manner from year to year and
distinguish the performance of the underlying operations of the business from
the impact of non-recurring items such as acquisitions and non-cash items.
Management consider it appropriate to adjust for amortisation and impairment
expenses and acquisition related expenditure such as professional fees,
restructuring costs and severance compensation related costs. Further,
performance fees, also being non-recurring, are removed from the calculation
of Gross profit excluding performance fees and dividend margin.
2. 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.
3. 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-23 31-Mar-22
£'000 £'000
Revenue 224,855 232,976
Performance fee revenue 18,484 12,595
Total revenue 243,339 245,571
Cost of sales (13,569) (14,252)
Gross profit 229,770 231,319
Gross profit excluding performance fee revenues 211,286 218,724
Revenue from customers includes:
- Investment management on unit trusts, open-ended investment
companies sub-funds, portfolios and segregated account.
- Performance fees on unit trusts, open-ended investment companies
sub-funds, portfolios and segregated accounts.
- Fixed administration fees on unit trusts and open-ended
investment companies sub-funds.
- Net value of sales and repurchases of units in unit trusts and
shares in open-ended investment companies (net of discounts).
- Net value of liquidations and creations of units in unit trusts
and shares in open-ended investment companies sub-funds.
- Box profits on unit trusts.
- Foreign currency gains and losses.
- Less rebates paid on investment management fees.
The cost of sales includes:
- Operating expenses including (but not limited to) keeping a record of
investor holdings, paying income, sending annual and interim reports, valuing
fund assets and calculating prices, maintaining fund accounting records,
depositary and trustee oversight and auditors;
- Sales commission paid or payable; and
- 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 2023 has not been
recognised in the results for the year.
4. Administration expenses
Year ended 31 March 2023 Year ended 31 March 2022
£'000 £'000 £'000 £'000 £'000 £'000
Fixed Variable Total Fixed Variable Total
Staff related expenses
Wages and salaries 30,178 35,221
Fund management 5,109 2,963 8,072 3,606 10,962 14,568
Other staff 16,559 5,547 22,106 12,045 8,608 20,653
Social Security costs 4,105 4,539
Fund management 1,300 - 1,300 2,782 - 2,782
Other staff 2,805 - 2,805 1,757 - 1,757
Pensions 2,388 1,745
Fund management 442 - 442 421 - 421
Other staff 1,946 - 1,946 1,324 - 1,324
Share incentivisation expense - all staff - 2,534 2,354 - 3,446 3,446
DBVAP expense - all staff - 2,777 2,777 - 2,405 2,405
Severance compensation - all staff(2) - 3,995 3,995 - 704 704
Member related expenses
Members drawings charged as an expense 59,507 54,639
Fund management 14,449 35,359 49,808 7,263 34,232 41,495
Other members 5,501 4,198 9,699 5,308 7,836 13,144
Share incentivisation expense - all members - 1,225 1,225 - 1,257 1,257
Non-staff related expenses
Professional services (2) 8,026 6,920
Depreciation and Intangible asset amortisation & impairment 31,492 12,115
Other administration expenses 37,163 28,925
183,210 151,916
(2) Includes acquisition and re-organisation related costs for Architas,
Neptune and Majedie.
5. Adjusted profit before tax
Adjusted profit before tax is disclosed in order to give shareholders an
indication of the profitability of the Group, non-cash (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-23 31-Mar-22
£'000 £'000
Profit before tax 49,301 79,291
Write back of Majedie acquisition provision (1,848) -
Severance compensation and staff reorganisation costs(3) 3,995 704
Professional services(3) 8,026 6,920
Intangible asset amortisation 27,609 9,641
Adjustments 37,782 17,265
Adjusted profit before tax 87,083 96,556
Interest receivable (358) (4)
Adjusted operating profit 86,725 96,552
Adjusted basic earnings per share 110.21 129.00
Adjusted basic earnings per share (excluding performance fees)(4) 101.38 121.98
Adjusted diluted earnings per share 109.78 127.63
Adjusted diluted earnings per share (excluding performance fees)(4) 100.98 120.68
(3) Includes acquisition and/or re-structuring related costs for Architas,
Neptune and Majedie
(4) Performance fee revenues contribution calculated in line with operating
margin of 38% (2022: 42%) and a taxation rate of 19% (2022: 19%).
6. 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 2023. This is reconciled to the actual weighted number of
Ordinary Shares as follows:
As at As at
31-Mar-23 31-Mar-22
number number
Weighted average number of Ordinary Shares 63,998,999 60,628,715
Weighted average number of dilutive Ordinary shares under option:
- to the Liontrust Long Term Incentive Plan 247,003 625,902
- to the Liontrust Option Plan 4,559 22,863
Adjusted weighted average number of Ordinary Shares 64,250,561 61,277,480
7. Financial assets
The Group holds financial assets that have been categorised within one of
three levels using a fair value hierarchy that reflects the significance of
the inputs into measuring the fair value. These levels are based on the degree
to which the fair value is observable and are defined as follows:
a) Level 1 fair value measurements are those derived from quoted prices
(unadjusted) in active markets for identical assets and liabilities;
b) Level 2 fair value measurements are those derived from inputs other
than quoted prices included within level 1 that are observable for the asset
or liability, either directly (i.e. as prices) or indirectly (i.e. derived
from prices); and
c) Level 3 fair value measurements are those derived from valuation
techniques that include inputs for the asset or liability that are not based
on observable market data.
As at the balance sheet date all financial assets are categorised as Level 1.
Assets held at fair value through profit and loss:
The Group's 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.
8. Acquisition of GAM Holding AG
On 4 May 2023, Liontrust conditionally agreed to acquire the entire issued
share capital of GAM Holding AG ("GAM"), a global investment management group
(the "Proposed Acquisition"), by way of public exchange offer with ordinary
shares of 1 pence each in the capital of Liontrust ("Liontrust Shares" , and
each individually a "Liontrust Share") to be issued to GAM shareholders for a
total consideration representing a valuation of the entire issued share
capital of GAM of CHF 107 million (£96 million) (the "Consideration"),
equivalent to CHF 0.6723 per publicly held registered shares (Namenaktien) of
GAM with a nominal value of CHF 0.05 each ("GAM Shares", and each individually
a "GAM Share"), on completion of the Proposed Acquisition ("Completion").
As part of the transaction, Liontrust has agreed to provide GAM with two
tranches of short-term secured financial support in an aggregate amount of up
to £17.8 million ("Financial Support"). The main purpose of this Financial
Support is to enable the acceleration of restructuring activity within GAM and
between GAM group entities. These arrangements will terminate on 31 December
2023 if the Proposed Acquisition has not completed by that date. On 13 June
2023 the circular related to the proposed acquisition of GAM was mailed to
shareholders, and on the same day the Swiss offer prospectus setting out the
terms and conditions of the proposed acquisition to the GAM Holding AG
shareholders was also published. Also, on 13 June 2023 Liontrust announced
that it had mailed a circular to shareholders in connection with the proposed
cancellation of the entire amount currently standing to the credit of the
Company's share premium account.
9. Contingent assets and liabilities
The Group can earn performance fees on some of the segregated and fund
accounts that it manages. In some cases a proportion of the fee earned is
deferred until the next performance fee is payable or offset against future
underperformance on that account. As there is no certainty that such deferred
fees will be collectable in future years, the Group's accounting policy is to
include performance fees in income only when they become due and collectable
and therefore the element (if any) deferred beyond 31 March 2023 has not been
recognised in the results for the year.
10. Key risks
The Directors have identified the risks and uncertainties that affect the
Group's business and believe that they are substantially the same for this
year as the current risks as identified in the 2022 Annual Report and
Accounts. These can be broken down into risks that are within the
management's influence and risks that are outside it.
Risks that are within management's influence include areas such as the
expansion of the business, prolonged periods of under-performance, loss of key
personnel, human error, poor communication and service leading to reputational
damage and fraud.
Risks outside the management's influence include falling markets, terrorism, a
deteriorating UK economy, investment industry price competition and hostile
takeovers.
Management monitor all risks to the business, they record how each risk is
mitigated and have warning flags to identify increased risk levels. Management
recognise the importance of risk management and view it as an integral part of
the management process which is tied into the business model.
11. Directors responsibility statement
To the best of their knowledge and belief, the Directors confirm that:
The 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 2023 Annual Report and Accounts is expected to be posted to shareholders
on or around 8 July 2023.
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)
. Telephone lines are open between 08:30 - 17:30, Monday to Friday excluding
public holidays in England and Wales.
END
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