7th Jul 2006 11:00
7 July 2006 Stock Exchange Announcement LIONTRUST ASSET MANAGEMENT PLC Chairman's Statement I am pleased to report a robust set of results. They are robust in that theyshow how our business model insulates us quite well from the usual variablesthat affect fund management companies. Levels of funds under management, themargins on them, the level of the stockmarket, new business flows and in thislast year the effects of the new accounting standard IFRS; they all have animpact.The average level of our funds under management at ‚£4.543 billion this year was10% lower than the average level during the previous financial year, yetprofits were only 2% lower. The stockmarket continued, as it always will, to goup and down. But we don't run our business on the basis that a rise in thestockmarket will drive our profits. Sound management will achieve that. We knowthat the market fluctuates through time. As well as reaping the benefits from astrong and rising market we want to make sure that we can withstand falls whenthey occur. In my statement in the Company's 2006 Annual Report and Accounts Isaid that our cost:income ratio implies we would still be profitable if theFTSE 100 index fell to 1968. I mention this as it is our primary duty to run abusiness that provides continuity of service to our clients.Particularly notable among the metrics we use to measure our progress are:changes in non-people costs which we reduced by 24% this year through reducedcosts of outsourcing and reduced administration costs on withdrawn pension fundmandates; the revenues and profits we generate per employee which were ‚£715,000and ‚£258,000 respectively this year; margins (based on profit before taxdivided by average funds under management) which were up slightly to 0.23%.Funds under management stood at ‚£5.074 billion on 31 March 2006. Funds undermanagement stood at ‚£5.122 billion on 6 July 2006.Although we had a net ‚£268 million of pension fund assets withdrawn during theyear, the pattern has changed since. In the last three months we have attracteda net ‚£182 million in new pension fund assets. A similar pattern has occurredwith unit trusts. In the year net unit trust redemptions were ‚£128 million andhave been flat over the last three months, while gross sales have averaged ‚£27million per month over the same period.Shareholders will have read in my last statement that according to a recentsurvey 62% of fund managers have changed jobs in the last three years. Ourresearch tells us that investors want stability and continuity not frequentchange.The position of continuity among our fund management teams is as follows.Jeremy Lang has been with Liontrust since 1995, and it is 20 years next monthsince he and William Pattisson first started working together. Anthony Crossjoined at the beginning of 1998. Gary West and James Inglis-Jones have workedtogether for over nine years, the first few with William Pattisson.The addition of our two new fund managers, Gary and James, marks our first moveinto a new product area. We are delighted they have joined us and are confidentthat the process they develop for the management of European equities will beas robust as our four current investment processes for UK equities. Theirinvestment process will, of course, be different but it will share many of thecharacteristics common to our existing ones, being rooted in behaviouralfinance.We plan to introduce the European process to selected clients in September withthe first investment product being a unit trust. We plan for segregated, pooledpension fund and alternative investment fund accounts to be established in duecourse and for a Luxembourg SICAV to be established early next year foroverseas clients. We will develop sales to a continental European client base.In establishing Liontrust European Investment Services Limited as a subsidiarycompany in which fund managers buy a minority interest we have tackled thethorny question of how to get equity into fund managers' hands. Ensuring equityparticipation of other employees, all of whom are key to our business, issomething we are still working on.We believe we now have the template to move into other new product areas. Weknow what we're looking for and how hard it is to find. Other areas will followin time but there is no urgency. More important, in our view, is to take timeand get it right rather than be hasty and get it wrong.The goal remains to increase the total return for shareholders from Liontrustshares. We will continue to look for ways of achieving this including a focuson efficient balance sheet management given current cash levels, which in turncould include the purchase of our own shares for cancellation. We would do thisunder the annually renewed authority given to the board by shareholders.We now have as clients many highly respected pension funds, 20,000 privateinvestors, 5,000 intermediaries of different types with whom we regularlycommunicate and we are on 16 UK distribution platforms including `fundsupermarkets'. We have a staff of 39 people who really enjoy what they do. Manyhaving worked together for a very long time.We can achieve a lot more. I must say that I really look forward to theprospect and the path to achieving it.Bernard H AsherChairmanFor further information please contact:Liontrust Asset Management PLC:Nigel Legge or Vinay Abrol Tel: 020-7412 1700JPMorgan Cazenove Limited:Richard Locke Tel: 020-7155 4706ENDSENDLIONTRUST ASSET MANAGEMENT PLCRelated Shares:
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