11th Nov 2005 07:00
Embargoed until 0700 hours, Friday 11th November 2005 LIONTRUST ASSET MANAGEMENT PLC Interim results for the six months to 30th September 2005 Liontrust Asset Management PLC ("Liontrust" or "the Group"), the independentspecialist UK equities fund management group, today announces its interimresults for the six months ended 30th September 2005. * Profits before tax increased marginally to ‚£5.27 million on reduced average funds under management of ‚£4.36 billion. On 30th September 2005 funds under management stood at ‚£4.46 billion. * Profits before tax as a percentage of average funds under management up 14% to 0.24%. * Cost: income ratio better at 63.8% from 64.4%. * Basic earnings per share rose 1.6% to 11.20 pence. * Interim dividend increased by 5% to 2.1 pence. Commenting on these results, Nigel Legge, Chief Executive said:"These are another solid set of results. Our cost income ratio and profitsbefore tax have improved despite a fall in funds under management.Investment performance across our Large Cap and Growth portfolios has improvedrecently. The Income and Small Cap unit trusts have continued to do well. Welaunched a new unit trust on 10th November which is managed by our highlysuccessful UK small cap manager, Anthony Cross, and are working on some newproduct initiatives. Some of these can be developed in-house while others willrequire recruitment.As the Chairman says in his statement, these results have been prepared usingthe new IFRS reporting standards and the prior period comparatives have alsobeen restated to reflect this. This has been a considerable amount of work,hence the slight delay in releasing our interim results this year."Chairman's Statement Liontrust's interim results for the six months to 30th September 2005 have beenprepared under the International Financial Reporting Standards ("IFRS") regime.Results for comparative periods have been restated from a UK Generally AcceptedAccounting Principles ("UK GAAP") basis to an IFRS basis.The average level of funds under management over the six month period was ‚£4.36billion and 14% lower than the corresponding level of ‚£5.05 billion for the sixmonths to 30th September 2004. On 30th September 2005 our funds undermanagement stood at ‚£4.459 billion and ‚£4.425 billion on 9th November 2005.Profit before tax, however, increased marginally to ‚£5.27 million, comparedwith ‚£5.26 million for the same period a year ago. No performance related feeshave been earned during the period so that core and total operating profits arethe same. On an annualised basis profits before tax as a percentage of averagefunds managed are up 14% to 0.24% from 0.21% last year.Core and total basic earnings per share are 11.20 pence, compared with 11.02pence last year.Once again we have kept a tight control on costs and as a result the cost:income ratio has fallen to 63.8% from 64.4% for the same period last year. Ouraverage headcount during the period was 37.Your Board has declared a 5% increase in the interim dividend to 2.1 pence pershare from 2.0 pence a year ago. The dividend will be paid on 13th December toshareholders on the register on 25th November with an ex-dividend date of 23rdNovember.At the end of September 2005 Liontrust First Income Fund, the unit trust basedon our Value Dynamic investment process, had grown to ‚£1,187 million from ‚£950million this time last year. Net redemptions of authorised unit trusts duringthe period were ‚£137 million. Gross unit trust sales averaged ‚£24 million permonth. Net institutional assets worth ‚£242 million were withdrawn during thesix months to 30th September 2005.In the ten months to 31st October 2005, the relative performance of the LargeCap and Growth investment processes has improved. The performance on the othertwo processes remains strong. The total return from the First Income unit truststands at 9.7%.The unit trust based on our Small Cap process is up by 9.3%while its benchmark is up by 10.1%. The unit trusts based on our Large Cap andGrowth processes are up by 12.1% and 12.7% respectively compared with theirbenchmark, the FTSE All-Share (total return) index which is up by 13.7%.* Allinstitutional mandates with performance fee structures are based on either theLarge Cap or Growth investment processes. We believe the stock marketenvironment has returned to one which better suits our Large Cap and Growthinvestment processes.Recent experience supports our view that the nature of our business model,built around clearly articulated investment processes, is an effective way toorganise a fund management company. It gives the firm an excellent platform onwhich to build and add further value.During the period we have continued to seek opportunities for future profitablegrowth and progress has been made. We will report to shareholders at theappropriate time. We are enthusiastic about our prospects.Bernard AsherChairman10th November 2005For further information please contact:Liontrust Asset Management PLC Nigel Legge 020 7412 1700JP Morgan Cazenove Richard Locke 020 7155 4706*All figures sourced from Lipper, bid to bid basis, income reinvested.Consolidated Income StatementSix months to 30th September 2005 Note Six Six Twelve months months months to 30.9.05 to 30.9.04 to 31.3.05 (unaudited) (unaudited) (audited) ‚£'000 ‚£'000 ‚£'000 Continuing operations Revenue 472,624 412,473 676,966 Cost of sales (459,544) (398,811) (649,326) Gross profit 13,080 13,662 27,640 Other income 47 - - Administrative expenses (8,376) (8,802) (17,837) Operating profit 4,751 4,860 9,803 Interest receivable 514 397 896 Profit before tax 5,265 5,257 10,699 Taxation 2 (1,644) (1,609) (3,192) Profit for the period 3,621 3,648 7,507 Memo - Dividends (2,892) (2,234) (2,896) Pence pence pence Basic earnings per share 3 11.20 11.02 22.80 Diluted earnings per share 3 11.20 10.89 22.55Consolidated Balance SheetAt 30th September 2005 30.9.05 30.09.04 31.3.05 (unaudited) (unaudited) (audited) ‚£'000 ‚£'000 ‚£'000 Non current assets Property, plant and 177 261 227equipment 177 261 227 Current assets Debtors 15,663 15,739 31,134 Deferred tax assets 157 213 209 Short term investments 474 208 315 Cash and cash 25,272 17,465 26,140equivalents 41,566 33,625 57,798 Liabilities Current liabilities Creditors (27,722) (20,052) (41,381) Accruals (628) (1,202) (932) (28,350) (21,254) (42,313) Net current assets 13,216 12,371 15,485 Net assets 13,393 12,632 15,712 Shareholders' equity Ordinary shares 352 350 352 Share premium 8,878 8,630 8,878 Retained earnings 14,709 10,319 13,729 Own shares held (10,546) (6,667) (7,247) Total equity 13,393 12,632 15,712Consolidated Cash Flow StatementSix months to 30th September 2005 Six Six Twelve months months months to 30.9.05 to 30.9.04 to 31.3.05 (unaudited) (unaudited) (audited) ‚£'000 ‚£'000 ‚£'000 Cash flows from operating activities Cash inflow from operations 488,221 420,528 690,328 Cash outflow from operations (481,747) (416,249) (675,332) Net cash generated from 6,474 4,279 14,996operations Interest received 514 397 896 Tax paid (1,687) (773) (2,306) Net cash from operating 5,301 3,903 13,586activities Cash flows from investing activities Purchase of property and 22 (17) (613)equipment Available for sale (3,299) - -investments Net cash from investing (3,277) (17) (613)activities Cash flows from financing activities Net proceeds from issue of - - 250new shares Dividends paid to (2,892) (2,234) (2,896)shareholders Net cash used in financing (2,892) (2,234) (2,646)activities Net (decrease)/increase in (868) 1,652 10,327cash and cash equivalents Opening cash and cash 26,140 15,813 15,813equivalents Closing cash and cash 25,272 17,465 26,140equivalents Consolidated Statement of Changes in EquitySix months to 30th September 2005 Share Share Retained Own Total shares capital premium earnings held equity ‚£ '000 ‚£ '000 ‚£ '000 ‚£ '000 ‚£ '000 Balance at 352 8,878 13,729 (7,247) 15,712 1st April 2005 brought forward Purchase - - - (3,299) (3,299) of shares by EBT Profit for - - 3,621 - 3,621 the period Total - - 3,621 - 3,621 recognised income for the year Dividends - - (2,892) - (2,892) Issue of - - - - - share capital Equity - - 251 - 251 share options issued Balance at 352 8,878 14,709 (10,546) 13,393 30 September 2005 Notes to the Financial Statements 1. Principle accounting policies a) Basis of preparationThe unaudited interim financial information, which has been approved by theBoard of Directors, has been prepared on the basis of the accounting policies(as set out below) which comprise standards and interpretations approved by theEuropean Union. Comparative information has been adjusted accordingly.The interim financial information has been prepared on the basis of theCompany's expectation of the standards that will be applicable as at 31st March2006.Further standards and interpretations may be issued that could be applicablefor financial years beginning on or after 1st April 2005 or that are applicableto later accounting periods but with the option for companies to adopt forearlier periods. The Company's first annual financial statements prepared underIFRS may, therefore, be prepared in accordance with accounting policiesdifferent from those used in the preparation of the financial information inthis report. At this interim stage, before the Company's first annual financialstatements under IFRS are completed, it should be noted that the financialinformation in this report could be subject to change.In accordance with the transitional provisions set out in IFRS 1 `First-timeAdoption of International Financial Reporting Standards' and other relevantstandards, the Company has applied IFRS expected to be in force as at 31stMarch 2006 in its financial reporting with effect from 1st April 2004, with theexception of the standards relating to financial instruments which were appliedwith effect from 1st April 2005 as described below.The financial information contained within this Interim Report has beenprepared under the historical cost convention (except for the measurement offinancial assets at fair value through profit or loss which are held at fairvalue).b) First time adoption of IFRSUnder IFRS 1 `First-time adoption of International Financial ReportingStandards' there are a number of exemptions from other IFRS which may beutilised at the point of initial adoption. The Company has taken advantage oftwo of these exemptions as follows:The Company has elected, for share based payments made prior to 7th November2002, not to calculate a charge to the income statement.IFRS 1 includes specific transitional provisions for IAS 32 and 39. The Companyhas decided to take advantage of these provisions and therefore has not appliedthese standards to the comparative figures, under which financial instrumentsare included using the measurement bases and the disclosure requirements of UKGAAP relating to financial instruments.c) Basis of consolidationThe consolidated financial information incorporates the results of the Companyand all its subsidiaries.d) Fixed assets and depreciationLeasehold improvements and furniture are included at cost and are depreciatedover the lower of the estimated useful life and the lease term, which is tenyears.Office equipment is included at cost and is depreciated over the estimateduseful life of the asset, which is between three and ten years.Computer equipment is included at cost and is depreciated over the estimateduseful life of the asset, which is three years.At each reporting date management reviews its fixed assets and assesses whetherany assets may be impaired.e) Short term investmentsThe Company holds short term investments, which are unit trust units held inthe `manager's box' to ease the calculation of daily creations andcancellations of units. These box positions are not held to create speculativeproprietary positions but are managed in accordance with specified criteria andauthorisation limits.Accounting polices applicable up to 31st March 2005.The manager's box is held in the balance sheet at the lower of cost and netrealisable value.Accounting policy applicable from 1st April 2005These units are held at fair value through profit or loss and are valued on abid price basis.f) Cash and cash equivalentsCash comprises cash on hand and demand deposits. Cash equivalents areshort-term, highly liquid investments that are readily convertible to knownamounts of cash and which are subject to an insignificant risk of change invalue. Under IFRS cash and cash equivalents are included in the cash flowstatement.g) Own sharesOwn shares held by the Liontrust Asset Management Employee Trust are valued atcost and are shown as a deduction from the Group's shareholders' equity. Nogains or losses are recognised in the income statement.h) Operating leasesLeases in which a significant portion of the risks and rewards of ownership areretained by the lessor are classified as operating leases. Payments made underoperating leases (net of any incentives received from the lessor) are chargedto the income statement on a straight-line basis over the period of the lease.i) Income and expensesIncome and expenses are accounted for on an accruals basis when they becomereceivable or payable.Front end fees received and commissions paid on the sales of units in unitisedfunds are amortised over the estimated life of the unit.Performance fees are recognised in the period in which they become due andcollectable. Any portion of performance fees that are not due and collectable,and whose future entitlement is not certain, is not recognised but noted as acontingent asset.j) Deferred taxationDeferred taxation is accounted for on an undiscounted basis at expected taxrates on all differences arising from the inclusion of items of income andexpenditure in tax computations in periods different from those in which theyare included in the financial information. A deferred tax asset is onlyrecognised when it is more likely than not that an asset will be recoverable inthe foreseeable future out of suitable taxable profits from which theunderlying timing differences can be deducted.k) PensionsThe Company operates defined contribution schemes for its employees. The assetsare invested with insurance companies and are held separately from the Company.The costs of the pension scheme are recognised in the consolidated incomestatement in the period in which they are incurred.l) Employee share optionsThe Company operates a number of share options schemes for employees. Theservices received from the employees are measured by reference to the fairvalue of the share options. The fair value of the options issued is calculatedat grant date and is recognised in the consolidated income statement over thevesting period. IFRS 2 has been applied, in accordance with IFRS 1, to shareoptions granted after 7th November 2002 (note b).m) DividendsEquity dividends to the shareholders of the Company are recognised as aliability in the period during which they are declared.n) Holiday pay accrualUnder IAS 19, all accumulating employee compensated absences that are unused atthe balance sheet date are recognised as a liability. 2. Taxation The interim tax charge has been calculated at the estimated full year effectivecorporation tax rate of 30% (2004: 30%). 3. Earnings per share The calculation of basic earnings per share is based on profit after taxationand the weighted number of ordinary shares in issue for each period, excludingthe weighted number of shares held by the Liontrust Asset Management EmployeeTrust. The weighted average number of ordinary shares was 32,317,322 for thesix months ended 30th September 2005, 33,099,510 for the six months ended 30thSeptember 2004 and 32,924,922 for the year ended 31st March 2005.The calculation of diluted earnings per share is based on profit after taxationand the weighted average number of ordinary shares in issue for each period, asabove, adjusted for the effect of options to subscribe for shares that were inexistence at 30 September 2005. The adjusted weighted average number ofordinary shares so calculated was 32,319,157 for the six months ended 30thSeptember 2005, 33,510,931 for the six months ended 30th September 2004 and33,292,740 for the year ended 31st March 2005.In accordance with the methodology set out in the Annual Report & Accounts wehave stated two further measures of basic and diluted earnings per share. Theadjusted figure is calculated after removing the exceptional item andassociated tax charge/ credit. The core figure is calculated after removing theexceptional item, the performance related fees and costs and related taxcharges. These additional measures of earnings are shown below. 30.9.05 30.9.04 31.3.05 Pence pence Pence Basic earnings per share 11.20 11.02 22.80(adjusted) Basic earnings per share (core) 11.20 11.02 22.80 Diluted earnings per share 11.20 10.89 22.55(adjusted) Diluted earnings per share 11.20 10.89 22.55(core) 4. Dividends The directors propose to pay an interim dividend in respect of the currentperiod of 2.1 pence per share (2004: 2.0 pence) payable on 13th December 2005to shareholders on the register at the close of business on 25th November 2005with and ex-dividend date of 23rd November 2005. 5. Liontrust Enterprise Management Incentive Scheme In the 2002 Annual Report and Accounts it was stated that the LiontrustEnterprise Management Incentive Scheme (the "Scheme") would be operated on thebasis that options granted to eligible employees will be split 50/50 betweenoptions to subscribe and options to purchase and that the number of new shareswhich can be issued pursuant to options under the Scheme in any rolling tenyear period is limited to 10% of the issued ordinary share capital of theCompany. The Remuneration Committee and the Trustees of the Liontrust AssetManagement Employee Trust wish to notify shareholders of a change to the basison which they may operate the Scheme in future. It is intended that they mayvary the ratio between options to subscribe and options to purchase as theydeem appropriate. The number of new shares which can be issued pursuant tooptions under the Scheme in any rolling ten year period will continue to belimited to 10% of the issued ordinary share capital of the Company. For thenext grant of options they intend that options to purchase will make up over50% of the options. 6. IFRS reconciliations Reconciliations of the consolidated income statement and consolidated balancesheet for the six months to 30th September 2004 and the year ended 31st March2005 between UK GAAP and IFRS are set out below. Reconciliations of theconsolidated cash flow statements have not been included since there are noIFRS adjustments to them.The financial information on the transition to International FinancialReporting Standards press release dated 13th October 2005 containsreconciliations of the primary financial statements for the year ended 31stMarch 2005 from UK GAAP to IFRS, together with explanations of thosereconciling items. a. Consolidated income statement for the six months to 30th September 2004 To 30th IFRS To 30th September 2004 Adjustments September 2004 ‚£'000 ‚£'000 ‚£'000 Under Under UK GAAP* IFRS Continuing operations Revenue 412,580 (107) 412,473 Cost of sales (398,988) 177 (398,811) Gross profit 13,592 13,662 Administrative (8,659) (143) (8,802)expenses Operating profit 4,933 4,860 Interest receivable 397 397 Profit before tax 5,330 5,257 Taxation (1,589) (20) (1,609) Profit for the year 3,741 3,648 Dividends (662) (1,572) (2,234) * UK GAAP balances under IFRS format b. Consolidated balance sheet as at 30th September 2004 As at IFRS As at 30th September Adjustments 30th September 2004 2004 ‚£'000 ‚£'000 ‚£'000 Under Under UK GAAP* IFRS Non current assets Property, plant and 261 261equipment 261 261 Current assets Debtors 15,223 516 15,739 Deferred tax assets - 213 213 Short term investments 208 208 Cash and cash 17,465 17,465equivalents 32,896 33,625 Liabilities Current liabilities Creditors (20,682) 630 (20,052) Accruals - (1,202) (1,202) (20,682) (21,254) Net current assets 12,214 12,371 Net assets 12,475 12,632 Shareholders' equity Ordinary shares 350 350 Share premium 8,630 8,630 Retained earnings 10,162 157 10,319 Own shares held (6,667) (6,667) Total equity 12,475 12,632* UK GAAP balances under IFRS format c. Consolidated income statement for the year ended 31st March 2005 To 31st March IFRS To 31st March 2005 Adjustments 2005 ‚£'000 ‚£'000 ‚£'000 Under Under UK GAAP* IFRS Continuing operations Revenue 676,773 193 676,966 Cost of sales (649,274) (52) (649,326) Gross profit 27,499 27,640 Administrative (17,444) (393) (17,837)expenses Operating profit 10,055 9,803 Interest receivable 896 896 Profit before tax 10,951 10,699 Taxation (3,168) (24) (3,192) Profit for the year 7,783 7,507 Dividends (3,554) 658 (2,896) * UK GAAP balances under IFRS formatd) Consolidated balance sheet as at 31st March 2005 As at IFRS As at 31st March 2005 Adjustments 31st March 2005 ‚£'000 ‚£'000 ‚£'000 Under Under UK GAAP* IFRS Non current assets Property, plant and 227 227equipment 227 227 Current assets Debtors 30,847 287 31,134 Deferred tax assets - 209 209 Short term investments 315 315 Cash and cash 26,140 26,140equivalents 57,302 57,798 Liabilities Current liabilities Creditors (44,235) 2,854 (41,381) Accruals - (932) (932) (44,235) (42,313) Net current assets 13,067 15,485 Net assets 13,294 15,712 Shareholders' equity Ordinary shares 352 352 Share premium 8,878 8,878 Retained earnings 11,311 2,418 13,729 Own shares held (7,247) (7,247) Total equity 13,294 15,712* UK GAAP balances under IFRS format 7. Post balance sheet date event On 14th October 2005 the Liontrust Asset Management Employee Trust purchased anadditional 150,000 shares in Liontrust Asset Management PLC. Shares held by theEmployee Trust do not qualify for dividends and are treated as having beencancelled for the purposes of calculating earnings per share.This announcement constitutes non-statutory accounts under section 240 of theCompanies Act 1985. The results for the six months to 30th September 2005 areunaudited. The pre IFRS financial information for the year ended 31st March2005 has been abridged from the financial statements which received anunqualified audit report and which has been filed with the Registrar ofCompanies and did not contain a statement under section 237(2) or (3) of theCompanies Act, 1985. - ENDS - ENDLIONTRUST ASSET MANAGEMENT PLCRelated Shares:
Liontrust Asset Management