Liontrust Asset Management : Annual report 2024

About this update from Liontrust Asset Management Plc

C O U R A G E · P O W E R · P R I D E A N N U A L R E P O R T A N D F I N A N C I A L S TAT E M E N T S 2 0 2 4 L I O N T R U S T A S S E T M A N A G E M E N T P L C OUR PURPOSE To help clients enjoy a better financial future through the power of active management and distinct investment processes. INSIDE THIS REPORT Financial highlights Financial Statements - Group and Company Highlights and Key performance measures 4 Consolidated Statement of Comprehensive Income Consolidated Balance Sheet Strategic Report Consolidated Cash Flow Statement Chair's Statement 12 Consolidated Statement of Changes in Equity Chief Executive Officer's report 14 Notes to the Financial Statements Our Strategy 16 Company Financial Statements Our Business Model 23 Company Notes to the Financial Statements Financial review 28 Independent auditor's report to the members of Liontrust Principal Risks and Mitigations 38 Asset Management PLC Shareholder Information Our People 54 Glossary Responsible Capitalism 62 Governance Board of Directors 70 Risk management and internal controls report 75 Corporate Governance report 78 Directors' report 89 Directors' responsibility statement 94 Nomination Committee report 96 Audit & Risk Committee report 102 Remuneration report 106 148 149 150 151 152 186 189 194 201 202 2 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024 3 FINANCIAL HIGHLIGHTS HIGHLIGHTS ASSETS UNDER MANAGEMENT AND ADVICE* NET FLOWS* 31 March 31 March 2024 12% 2024 £27,822 million £(6,083) million 31 March 31 March 2023 2023 £31,430 million £(4,841) million GROSS PROFIT PROFIT/ (LOSS) BEFORE TAX ADJUSTED PROFIT BEFORE TAX* 19% 101% 23% £229.8m £186.1m £49.3m £(0.6)m £87.1m £67.4m 2023 2024 2023 2024 2023 2024 DILUTED EARNINGS ADJUSTED DILUTED TOTAL DIVIDEND PER SHARE EARNINGS PER PER SHARE SHARE* 109% 28% 0% 61.21 pence (5.46) pence 109.78 pence 79.16 pence 72 pence 72 pence 2023 2024 2023 2024 2023 2024 *These are Alternative Performance Measures. The disclosure, definition and nature of adjustments to GAAP measures to the disclosed APMs is a judgement made by management and is a matter referred to the Audit & Risk Committee for approval prior to issuing the financial statements. See Page 32 for further details. 4 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024 FINANCIAL HIGHLIGHTS 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: Institutional International Accounts & Investment UK Retail Alternative Funds & Total Funds Trusts Funds & MPS Funds Accounts Process (£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* 1 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 1 The Global Fundamental Global Equity Funds moved to Mark Hawtin's new Global Equity Team in May 2024. NET FLOWS The net outflows over the Financial Year were £6,083 million (2023: £4,841 million). A reconciliation of fund flows and AuMA over the Financial Year is as follows: Institutional International Accounts & Investment UK Retail Alternative Funds & Total Funds Trusts Funds & MPS 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 Mar 2024 27,822 1,741 1,135 23,815 236 895 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024 5 FINANCIAL HIGHLIGHTS KEY PERFORMANCE MEASURES Fund management ability and investment performance The strength of Liontrust's fund managers and investment processes is shown by the fact that over the period from launch or fund manager appointment to the end of each of the last three financial years, on an AuMA weighted basis, we have had over 60% or more of our actively managed UK retail AuMA in first quartile funds (see Figure 1). AuMA* Our AuMA has decreased by 12% from 31 March 2023 to 31 March 2024 and decreased by 17% from 31 March 2022 to 31 March 2024, reflecting market performance and net flows (see figure 3). Figure 3 - AuMA by investor type £'million Figure 1 - AuMA weighted quartile ranking since launch or manager inception (covers 75% of AuMA). 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% FY22 FY23 FY24 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 FY22 FY23 FY24 UK Retail Funds & MPS (£'m) Alternative Funds (£'m) Institutional Accounts & Funds (£'m) International Funds & Accounts (£'m) Investment trusts (£'m) First Quartile Third Quartile Second Quartile Fourth Quartile 1 net of fees and income reinvested. Net flows* Net flows in the year falling to £(6,083) million from +£2,488 million two years ago and from £(4,841) million last year. Adjusted profit before tax* Our adjusted profit before tax has decreased by 23% from 31 March 2023 to 31 March 2024 and by 30% from 31 March 2022 to 31 March 2024. Figure 4 - Adjusted profit before tax £'million 100 Figure 2 - Net flows £'million £4,000 80 £3,000 £2,000 60 £1,000 40 £0 (£1,000) 20 (£2,000) (£3,000) 0 (£4,000) (£5,000) (£6,000) (£7,000) FY22 FY23 FY24 FY22 FY23 FY24 *These are Alternative Performance Measures. The disclosure, definition and nature of adjustments to GAAP measures to the disclosed APMs is a judgement made by management and is a matter referred to the Audit & Risk Committee for approval prior to issuing the financial statements. See Page 32 for further details. 6 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024 SPLIT OF AUMA BY CLIENT TYPE Financial Adviser 37% Wealth Manager 17% Life & Pensions 15% Institutional 10% D2C/Execution only 8% Platform 8% Fund Manager 4% Other 2% FINANCIAL HIGHLIGHTS BY PRODUCT TYPE UK Retail Funds & MPS 86% £27.8bn AuMA Instl. Accounts & Funds 6% Investment Trusts 4% Int. Funds & Accounts 3% Alternative Funds 1% FUND PERFORMANCE Since inception / 1 year 8.9% 8.7% 20.9% (4) (8) (9) 17.8% 35.6% 17.4% (20) (6) 47.8% (8) 20.9% (7) (9) 19.6% (9) 14.0% 44.4% 26.7% (6) (20) (6) 15.2% (7) 13.3% (6) 23.9% 54.3% 44.2% (11) (25) (19) 28.9% 24.5% (13) (13) 13.0% (6) 2020 2021 2022 2023 2024 3 years 7.9% 9.3% 21.1% (3) (4) 24.4% 26.7% (8) 13.2% 14.0% (5) (12) (11) (6) 15.8% (6) 26.3% 27.9% 26.7% (10) (12) (12) 42.2% (19) 24.4% 63.2% (11) (24) 52.6% 48.8% 13.3% (20) (21) (6) 17.8% 24.4% (11) (8) 2020 2021 2022 2023 2024 5 years 11.8% 8.1% 13.2% (3) 15.8% 16.3% (4) 10.8% (5) (6) (11) 20.6% (4) 5.3% (2) 8.1% (4) (3) 23.7% 26.3% 23.3% (10) (10) (9) 17.6% (6) 13.2% 23.3% (5) (10) 73.0% (27) 57.9% 50.0% (22) 44.7% (17) 37.2% (17) (11) 2020 2021 2022 2023 2024 manager inception 13.6% 6.8% (3) 8.9% 11.1% 10.6% (6) (4) (5) (5) 15.9% 13.3% 14.9% 18.2% (4) (6) 28.9% (7) (8) 22.2% (13) 22.7% 15.9% (10) (10) 29.8% (7) 17.8% (14) (8) 52.3% 54.5% 55.6% (23) (24) (25) 42.2% 44.7% (19) (21) 2020 2021 2022 2023 2024 1st quartile 2nd quartile 3rd quartile 4th quartile Source: Liontrust, FE Analytics,31.03.24. Share classes are total return, net of fees, income reinvested. Quartiles as at 31.03.24, generated on 17.04.24. Details of the benchmarks can be found on the fund pages of the Liontrust website. Single strategy Liontrust funds both UK and offshore funds versus benchmark and those given an FE Analytics benchmark. LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024 7 FINANCIAL HIGHLIGHTS Fund Performance (Quartile ranking) Detailed quartile rankings by fund over one, three and five years and since launch date or fund manager appointment are shown in the table below: Quartile ranking - Since Launch/ Quartile Quartile Quartile Launch Date/ Manager ranking ranking ranking Manager Appointed - 5 year - 3 year - 1 year Appointed ECONOMIC ADVANTAGE FUNDS Liontrust UK Growth Fund 1 1 1 3 25/03/2009 Liontrust Special Situations Fund 1 2 3 4 10/11/2005 Liontrust UK Smaller Companies Fund 1 1 2 3 08/01/1998 Liontrust UK Micro Cap Fund 1 1 1 2 09/03/2016 SUSTAINABLE FUTURE FUNDS Liontrust SF Monthly Income Bond Fund 1 1 2 1 12/07/2010 Liontrust SF Managed Growth Fund 2 1 2 1 19/02/2001 Liontrust SF Corporate Bond Fund 1 2 2 1 20/08/2012 Liontrust SF Cautious Managed Fund 2 3 4 3 23/07/2014 Liontrust SF Defensive Managed Fund 1 3 4 2 23/07/2014 Liontrust SF European Growth Fund 3 4 4 4 19/02/2001 Liontrust SF Global Growth Fund 3 2 3 2 19/02/2001 Liontrust SF Managed Fund 1 1 3 1 19/02/2001 Liontrust UK Ethical Fund 3 4 4 3 01/12/2000 Liontrust SF UK Growth Fund 3 4 4 2 19/02/2001 Liontrust GF SF US Growth Fund 2 - - - - - - 07/07/2023 GLOBAL INNOVATION FUNDS Liontrust Global Dividend Fund 2 1 2 1 20/12/2012 Liontrust Global Innovation Fund 1 2 4 1 31/12/2001 Liontrust Global Technology Fund 2 2 1 1 15/12/2015 GLOBAL FUNDAMENTAL GLOBAL EQUITY FUNDS 1 Liontrust Balanced Fund 1 1 1 1 31/12/1998 Liontrust China Fund 4 3 4 3 31/12/2004 Liontrust Emerging Market Fund 3 4 3 1 30/09/2008 Liontrust Global Smaller Companies Fund 1 3 3 1 01/07/2016 Liontrust Global Alpha Fund 1 3 4 2 31/12/2001 Liontrust India Fund 4 2 1 1 29/12/2006 Liontrust Japan Equity Fund 2 1 2 1 22/06/2015 Liontrust Latin America Fund 3 4 4 3 03/12/2007 Liontrust US Opportunities Fund 1 3 3 1 31/12/2002 Liontrust GF US Equity Fund 2 1 3 1 26/06/2014 Liontrust GF International Equity Fund 4 - - 4 4 17/12/2019 8 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024 FINANCIAL HIGHLIGHTS Quartile ranking - Since Launch/ Quartile Quartile Quartile Launch Date/ Manager ranking ranking ranking Manager Appointed - 5 year - 3 year - 1 year Appointed CASHFLOW SOLUTION FUNDS Liontrust European Dynamic Fund 1 1 1 1 15/11/2006 GLOBAL FIXED INCOME FUNDS Liontrust Strategic Bond Fund 3 3 3 3 08/05/2018 GLOBAL FUNDAMENTAL TEAM FUNDS Liontrust UK Equity Fund 1 3 2 1 27/03/2003 Liontrust UK Focus Fund 1 4 3 1 29/09/2003 Liontrust Income Fund 1 1 1 1 31/12/2002 Liontrust GF UK Equity Fund 4 3 2 1 03/03/2014 Edinburgh Investment Trust Plc 1 - - 1 1 27/03/2020 1 The Global Fundamental Global Equity Funds moved to Mark Hawtin's new Global Equity Team in May 2024. Source: Financial Express to 31 March 2024 as at 4 April 2024, bid ‐ bid, total return, net of fees, based on primary share classes. Past performance is not a guide to future performance, investments can result in total loss of capital. The above funds are all UK authorised unit trusts, OEICs, Irish authorised OEICs (primary share class) or UK listed investment trusts. Liontrust Russia Fund is not included as it is currently suspended and in an IA sector that is not rankable (e.g. Specialist) so it would not be a fair comparison to make. Liontrust GF Tortoise Fund is not included as it is not in an IA sector. Edinburgh Investment Trust Plc uses the IT UK Equity Income sector. LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024 9

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