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Shares in Liontrust Asset Management rose by 7 per cent after the equity fund management specialist managed to produce an increase in first-half profits, with much of the gain reflecting a large jump in performance fees from £0.37m a year earlier to £3.89m.
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However, the company admitted that the second half is likely to be much tougher because funds under management have slid from £5.5bn a year earlier to £3.9bn at the end of September. And since then they have fallen further to £3.5bn. Performance fee income is especially vulnerable because it is based on relative rather than absolute performance. This means that performance fees can be earned by exceeding a benchmark index even if that index has actually fallen, and for this reason investors have been withdrawing funds.
Gross sales of unit trusts and offshore funds totalled £235m although net redemptions amounted to £73m. Meanwhile, the group remains in discussions following a bid approach in May that could lead to an offer being made for the company.
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| LIONTRUST ASSET MANAGEMENT(LIO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 123p | MARKET VALUE: | £ 42.4m | |
| TOUCH: | 120-126p | 12-MONTH HIGH: | 380p | LOW: 111p |
| DIVIDEND YIELD: | 10.2% | PE RATIO: | 3 | |
| NET ASSET VALUE: | 58p | NET CASH: | £12m | |
| Half-year to 30 Sep | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|
| 2007 | 5.59 | 12.5 | 2.5 |
| 2008 | 6.15 | 14.8 | 2.5 |
| % change | +10 | +18 | - |
Ex-div:19 Nov Payment:17 Dec |
|||
Shares in Liontrust have fallen 60 per cent since the bid approach was announced in May, and by the company's own admission the second half is going to be very tough as assets under management shrink further. So, despite the possibility of a bid, there is further downside risk. High enough.
Last IC View: Good value, 314p 27 May 2008
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