Liontrust Asset Management : Half Year Report & Financial Statements 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 H A L F - Y E A R R E P O R T A N D C O N D E N S E D I N T E R I M F I N A N C I A L S TAT E M E N T S ( U N A U D I T E D ) T O 3 0 S E P T E M B E R 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 DIRECTORS AND ADVISERS DIRECTORS, REGISTERED OFFICE Legal Advisers: AND COMPANY NUMBER: Macfarlanes LLP Luke Savage (Non-executive Chair) 20 Cursitor Street London EC4A 1LT John Ions (Chief Executive Officer) Bankers: Vinay Abrol (Chief Financial Officer) Royal Bank of Scotland Plc 280 Bishopsgate Rebecca Shelley (Senior Independent Director) London EC2M 4RB Mandy Donald (Non-executive Director) Financial Adviser and Corporate Broker: Singer Capital Markets Miriam Greenwood OBE DL (Non-executive Director) 1 Bartholomew Lane London EC2N 2AX 2 Savoy Court London WC2R 0EZ Panmure Liberum Registered in England with Company Number 02954692. Ropemaker Place, Level 12 Company Secretary: 25 Ropemaker Street London EC2Y 9LY Sally Buckmaster Independent Auditors: HSBC Bank plc 8 Canada Square KPMG LLP Canary Wharf 15 Canada Square London E14 5HQ London E14 5GL Registrars: Equiniti Limited Aspect House Spencer Road Lancing West Sussex BN99 6DA 2 LIONTRUST ASSET MANAGEMENT PLC HALF YEAR REPORT 2024 Luke Savage Non-executive Chair CHAIR'S STATEMENT I am delighted to have joined as the new Non-executive Chair of your Company and I am excited by the challenge and the opportunities in front of Liontrust, a company that I believe has an exciting future. Having met many people across the Group, I have been impressed by their quality and passion for the business, attributes that underpin the highly respected business and strong brand. The Group's agility and entrepreneurial culture means that it is possible for the business to make significant progress over a relatively short period of time. There are clearly challenges for active managers at the moment, particularly from the growing demand for passive vehicles. This has not shaken the commitment at Liontrust to active management and the value this can add to client portfolios. All active managers experience periods of volatile performance, and it is important always to understand what is driving this and the reasons for any underperformance. There is a real belief and trust in the investment processes at Liontrust and a recognition that the fund management teams stay true to them even during difficult times, especially when their investment approach is out of favour. The Board believes in the four strategic objectives that Liontrust has set for itself - Continue to enhance the client experience and outcomes; Diversify the product range and investment offering; Further broaden distribution and the client base; and strengthen our technological, data and digital capability - and is ensuring the business has the support and the means to execute these in the best way possible. There are a number of options, for example, for broadening the Group's distribution and fund range, and we will support what we see as the most effective means to expedite this. The Board has supported the investment in the business, the action to manage costs and other changes over the past year in the belief that these will help drive Liontrust forward. The confidence of the Board in the long-term outlook for the business and its financial strength is demonstrated by our intention to targeting the same dividends for the financial year ending 31 March 2025 as last year and the announcement of a share buyback programme. Results Gross Profit of £81.1 million (2023: £98.6 million and £92.5 million excluding performance fees), with a Revenue Margin 1 of 0.603% (2023: 0.627%) on Average AuMA of £26,860 million (2023: £29,495 million). Adjusted profit before tax 1 is £25.8 million (2023: £36.0 million), with an Adjusted Operating Margin 1 of 30.5% (2023: 35.9%). Statutory Profit before tax of £12.5 million (2023: Statutory Loss before tax of £10.1 million). This includes charges of £13.3 million (2023: £46.2 million) relating to acquisitions and non- recurring costs; the non-cash amortisation and impairment of the acquisition-related intangible assets and goodwill. 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 . First Interim Dividend In accordance with the Company's longstanding progressive dividend policy, which remains unchanged, the Board is declaring a first Interim dividend of 22.0 pence per share (2023: 22.0 pence) which will be payable on 8 January 2025 to shareholders who are on the register as at 29 November 2024, with the shares going ex-dividend on 28 November 2024. The last day for Dividend Reinvestment Plan elections is 13 December 2024. Business transformation programme In late 2023, Liontrust started a transformation of our business, with the initial focus on strengthening data management, delivery and analysis across the business through the implementation of an enterprise portfolio management system. The enhancements have been achieved by implementing BlackRock's Aladdin platform; a Middle-Office operating model with BNY; BNY Front Office Services; and a new enterprise data platform-BNY Data Vault. 1 This is an Alternative Performance Measure, see note 2 on page 17. LIONTRUST ASSET MANAGEMENT PLC HALF YEAR REPORT 2024 3 Liontrust is reorganising the fund ranges: the closure of four smaller funds in our Irish domiciled fund range, which was completed in October 2024; the merger (subject to investor approval) of the GAM Star Alpha Technology Fund into our newly launching Liontrust GF Global Alpha Long/Short Fund to be managed by Mark Hawtin and the Global Equities team; and further fund rationalisation. We expect all this reorganisation to be completed by the end of March 2025. We will integrate the Global Fixed Income investment team into the Multi-Asset investment team under John Husselbee and then insource the fixed income exposure that is currently with external fund managers for our Multi-Asset funds and portfolios by the end of 2025. This comes at a time when both teams believe there will be greater diversity in interest rate policies around the world and there is scope for greater impact from the fixed income exposure in the Multi-Asset investment team's asset allocation. The integration will provide the Multi-Asset investment team with greater control over managing duration and will enhance its expertise across rates and credit. The insourcing of the fixed income allocation should reduce costs for clients of the Multi-Asset funds and portfolios while the funds managed by the Global Fixed Income team will benefit from being provided with permanent capital by the Multi-Asset investment team. We are cutting our cost base, including through the proposed reduction of approximately 25 roles (12% of staff headcount) across our business for an annualised saving, if implemented in full, of employee-related, member-related and non-staff- related expenses of around £4.5 million. This is expected to be completed by the end of March 2025, and implementation costs for the role reductions are anticipated to be around £4.0 million, which will be incurred in the second half of the current financial year and the first half of the next. Capital Management As at 30 September 2024 the Company had surplus capital after foreseeable dividends of over £45 million (as set out in note 1d below). In light of this, the Directors intend to target a dividend of at least 72 pence per share for the year ending 31 March 2025. In addition, the Company is initiating a share buyback programme with an aggregate value of up to £5 million, to be phased over the period to 31 March 2025. The shares purchased by the Company will be cancelled. 4 LIONTRUST ASSET MANAGEMENT PLC HALF YEAR REPORT 2024 ASSETS UNDER MANAGEMENT AND ADVICE On 30 September 2024, our AuMA stood at £25,956 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 9,477 312 - 8,768 - 397 Economic Advantage 5,918 413 - 5,408 - 97 Multi-Asset 2 4,233 - - 4,034 99 100 Global Equities 1,149 - - 1,118 23 8 Global Innovation 834 - - 834 - - Cashflow Solution 2,411 516 - 1,562 136 197 Global Fundamental 1,934 228 1,186 515 - 5 Total 25,956 1,469 1,186 22,239 258 804 AuMA as at 14 November 2024 were £25,219 million. 2 Includes AuMA of the Global Fixed Income investment team which is being integrated into the Multi-Asset investment team. FLOWS The net outflows over the Period were £2,067 million (2023: £3,213 million). A reconciliation of fund flows and AuMA over the six-month period to 30 September 2024 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 2024 27,822 1,741 1,135 23,815 236 895 Net flows (2,067) (268) (20) (1,676) (11) (92) Market and Investment performance 201 (4) 71 100 33 1 Closing AuMA - 30 September 2024 25,956 1,469 1,186 22,239 258 804 LIONTRUST ASSET MANAGEMENT PLC HALF YEAR REPORT 2024 5 Key Fund Performance (Quartile ranking) UK domiciled funds 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 3 3 4 01/04/1996 Liontrust Special Situations Fund 1 3 3 4 10/11/2005 Liontrust UK Smaller Companies Fund 1 2 3 4 08/01/1998 Liontrust UK Micro Cap Fund 1 1 2 4 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 4 1 19/02/2001 Liontrust SF Corporate Bond Fund 3 2 3 1 19/02/2001 Liontrust SF Cautious Managed Fund 2 4 4 3 23/07/2014 Liontrust SF Defensive Managed Fund 1 4 4 2 23/07/2014 Liontrust SF European Growth Fund 3 4 4 2 19/02/2001 Liontrust SF Global Growth Fund 3 3 4 2 19/02/2001 Liontrust SF Managed Fund 2 2 4 1 19/02/2001 Liontrust UK Ethical Fund 3 4 4 1 01/12/2000 Liontrust SF UK Growth Fund 3 4 4 2 19/02/2001 GLOBAL INNOVATION FUNDS Liontrust Global Dividend Fund 2 1 1 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 EQUITIES FUNDS Liontrust Balanced Fund 1 1 3 1 31/12/1998 Liontrust China Fund 4 3 3 2 31/12/2004 Liontrust Emerging Market Fund 3 4 3 2 30/09/2008 Liontrust Global Alpha Fund 1 2 4 3 31/12/2001 Liontrust Global Smaller Companies Fund 4 3 4 3 31/12/2007 Liontrust India Fund 4 1 2 3 29/12/2006 Liontrust Japan Equity Fund 2 1 1 1 22/06/2015 Liontrust Latin America Fund 3 3 3 1 03/12/2007 Liontrust US Opportunities Fund 2 3 4 3 31/12/2002 6 LIONTRUST ASSET MANAGEMENT PLC HALF YEAR REPORT 2024 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 4 15/11/2006 GLOBAL FIXED INCOME FUNDS Liontrust Strategic Bond Fund 3 3 3 3 08/05/2018 GLOBAL FUNDAMENTAL FUNDS Liontrust Income Fund 1 2 2 3 31/12/2002 Edinburgh Investment Trust Plc 1 - 1 1 27/03/2020 Liontrust UK Equity Fund 1 2 2 2 27/03/2003 Liontrust UK Focus Fund 1 3 3 1 29/09/2003 MULTI-ASSET FUNDS Liontrust MA Explorer 35 Fund 1 - - 1 31/12/2002 Liontrust MA Explorer Income 45 Fund 2 - - 1 31/03/2020 Liontrust MA Explorer Income 60 Fund 1 - - 1 27/03/2003 Liontrust MA Explorer 70 Fund 2 - - 2 29/09/2003 Liontrust MA Explorer 85 Fund 1 - - 2 29/09/2003 Liontrust MA Explorer 100 Fund 1 - - 2 29/09/2003 Liontrust MA Monthly High Income Fund 3 4 2 1 01/05/2012 Liontrust MA UK Equity Fund 4 3 2 2 12/11/2001 Liontrust Strategic Bond Fund 2 3 3 1 08/05/2018 LIONTRUST ASSET MANAGEMENT PLC HALF YEAR REPORT 2024 7 Key Fund Performance (Quartile ranking) Irish domiciled funds 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 GF Special Situations Fund 1 3 3 3 08/11/2012 Liontrust GF UK Growth Fund 1 2 2 4 03/09/2014 SUSTAINABLE FUTURE FUNDS Liontrust GF SF European 2 2 2 1 29/05/2018 Corporate Bond Fund Liontrust GF SF Global Growth Fund 2 - 4 2 12/11/2019 Liontrust GF SF Multi Asset Global Fund 4 - - 2 13/10/2021 Liontrust GF SF Pan-European Growth Fund 3 4 4 2 14/03/2001 Liontrust GF SF US Growth Fund 3 - - - 3 07/07/2023 CASHFLOW SOLUTION FUNDS Liontrust GF European Smaller 1 1 1 1 01/02/2017 Companies Fund Liontrust GF European Strategic Equity Fund 1 1 1 1 25/04/2014 MULTI-ASSET FUNDS Liontrust GF Absolute Return Fund 3 3 2 3 26/06/2018 Liontrust GF High Yield Fund 1 2 2 1 08/06/2018 Liontrust GF Strategic Bond Fund 1 2 2 1 13/04/2018 Source: Financial Express to 30 September 2024 as at 7 October 2024, bid-bid, total return, net of fees, based on primary share class. 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. Onshore funds use the Financial Express Investment Association sectors. Offshore funds use the FCA Recognised offshore sectors. Edinburgh Investment Trust Plc uses the AIC Investment Trust UK Equity Income sector. MA Explorer funds had an objective change on 05/04/2023 and rankings are shown from then. MA Dynamic Passive fund range, MA Blended fund range, Diversified Real Assets Fund and Russia Funds (suspended) are not included as are in an IA sector that is not rankable, GF Pan European Dynamic Fund is excluded because was recently launched. GF UK Equity, International Equity, US Equity and GF Tortoise are excluded as these funds are closing. Looking forward Everyone at Liontrust is focused on returning the business to positive net flows and are confident that Liontrust has the right strategy, investment teams, brand, client relationships and strength of marketing to achieve this. Over the long term, the investment teams and processes have proved they add value to our clients and the fact that Liontrust is so highly regarded for communications and client service and engagement shows how well positioned we are to take advantage of improving fund performance. As the new Non-executive Chair, I am looking forward to being part of the development of Liontrust over the coming years. Luke Savage Non-executive Chair 20 November 2024 8 LIONTRUST ASSET MANAGEMENT PLC HALF YEAR REPORT 2024 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Six months ended 30 September 2024 Six months to Six months to Year ended 30-Sep-24 30-Sep-23 31-Mar-24 (unaudited) (unaudited) (audited) Note £'000 £'000 £'000 Revenue 4 87,039 104,547 197,889 Cost of sales 4 (5,973) (5,979) (11,828) Gross profit 81,066 98,568 186,061 Realised (loss)/gain on sale of financial assets (6) 12 184 Unrealised gain/(loss) on financial assets 174 (132) 838 Administration expenses 5 (69,809) (109,164) (188,932) Operating profit/(loss) 11,425 (10,716) (1,849) Interest receivable 1,121 642 1,337 Interest payable (42) (52) (67) Profit/(Loss) before tax 12,504 (10,126) (579) Taxation (charge)/credit 7 (3,766) 796 (2,911) Profit/(Loss) for the period 8,738 (9,330) (3,490) Other comprehensive income: - - - Total comprehensive income 8,738 (9,330) (3,490) Pence Pence Pence Basic earnings per share 8 13.67 (14.61) (5.46) Diluted earnings per share 8 13.67 (14.61) (5.46) All of the results are derived from continuing operations. The accompanying notes form an integral part of these unaudited condensed interim financial statements. LIONTRUST ASSET MANAGEMENT PLC HALF YEAR REPORT 2024 9 CONSOLIDATED BALANCE SHEET As at 30 September 2024 30-Sep-24 30-Sep-23 31-Mar-24 (unaudited) (unaudited) (audited) Note £'000 £'000 £'000 Assets Non current assets Intangible assets 9 43,919 58,233 48,472 Goodwill 10 32,110 34,052 32,110 Property, plant and equipment 2,809 2,600 3,719 78,838 94,885 84,301 Current assets Trade and other receivables 11 172,716 194,665 229,586 Financial assets 12 5,752 9,710 8,157 Cash and cash equivalents 88,508 96,932 104,318 Total current assets 266,976 301,307 342,061 Liabilities Non current liabilities Deferred tax liability (10,089) (13,393) (11,227) Lease liability (1,517) (1,684) (2,538) Total non current liabilities (11,606) (15,077) (13,765) Current liabilities Trade and other payables (181,282) (199,884) (241,363) Corporation tax payable (4,468) (1,208) - Total current liabilities (185,750) (201,092) (241,363) Net current assets 81,226 100,215 100,698 Net assets 148,458 180,023 171,234 Shareholders' equity Ordinary shares 648 648 648 Capital redemption reserve 19 19 19 Retained Earnings 160,763 190,685 183,461 Own shares held (12,972) (11,329) (12,894) Total equity 148,458 180,023 171,234 10 LIONTRUST ASSET MANAGEMENT PLC HALF YEAR REPORT 2024

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