P R I D E I N O U R P E R F O R M A N C 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 T A T E M E N T S 2 0 2 2
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
Our purpose is to deliver positive outcomes for our investors, stakeholders and society. We aim
to achieve this by providing the environment which enables our fund managers and employees to
flourish, helping our investors to achieve their long-term financial goals, supporting companies in
generating sustainable growth, and empowering and inspiring the wider community.
INSIDE THIS REPORT
Financial highlights
Governance
Highlights and Key performance measures
4
Board of Directors
Strategic Report
Chair’s Statement
Chief Executive’s report
Our strategy
Our business model
Financial review
Sales and marketing review
Operations review
Principal risks and mitigations
Our People, Sustainability and Corporate Responsibilities
10
12
14
20
26
34
40
42
52
Risk management and internal controls report
Directors’ report
Directors’ responsibility statement
Corporate Governance report
Directors Board Attendance Report
Nomination Committee report
Audit & Risk Committee report
Remuneration report
Financial Statements – Group and Company
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Cash Flow Statement
Consolidated Statement of Changes in Equity
Notes to the Financial Statements
Independent auditor’s report to the members of Liontrust
Asset Management PLC
Shareholder Information
76
81
84
87
89
94
97
102
106
140
141
142
143
144
184
192
2
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
3
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022 HIGHLIGHTS
Sustained growth of our AuMA from £30,929 million to £33,548 million demonstrates the substantial progress made in the year. We
are delighted to have recorded our 12th consecutive year of net inflows
ASSETS UNDER MANAGEMENT AND ADVICE
NET FLOWS
31 March
2022
8.5%
31 March
2022
29%
£33,548 million
£2,488 million
31 March
2021
31 March
2021
£30,929 million
£3,498 million
GROSS PROFIT
PROFIT BEFORE TAX
ADJUSTED PROFIT
BEFORE TAX*
41%
m
3
.
1
3
2
£
m
8
.
3
6
1
£
127%
64%
m
9
.
4
3
£
m
3
.
9
7
£
m
0
.
9
5
£
m
6
.
6
9
£
2021
2022
2021
2022
2021
2022
ADJUSTED
DILUTED
EARNINGS
PER SHARE
EXCLUDING
PERFORMANCE
FEES*
e
c
n
e
p
6
4
.
3
7
64%
e
c
n
e
p
8
6
.
0
2
1
TOTAL DIVIDEND
PER SHARE
53%
e
c
n
e
p
2
7
e
c
n
e
p
7
4
2021
2022
2021
2022
*These are alternative performance measure (‘APM’). See page 30 for further details.
4
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL HIGHLIGHTS
ASSETS UNDER MANAGEMENT AND ADVICE
On 31 March 2022, our AuMA stood at £33,548 million and were broken down by type and investment process as follows:
Process
Sustainable Investments
Economic Advantage
Multi-Asset
Global Equity
Cashflow Solution
Global Fixed Income
Total
Total
(£m)
13,227
9,035
6,660
2,868
1,094
664
Institutional
(£m)
136
455
–
167
650
–
UK Retail
(£m)
12,187
8,201
–
2,701
364
300
Multi Asset
(£m)
Offshore Funds
(£m)
–
–
6,660
–
–
–
904
379
–
–
80
364
1,727
33,548
1,408
23,753
6,660
31 MARCH
2022
£33,548m
31 MARCH
2021
£30,929m
Increase of
8.5%
over the financial year
FUND FLOWS
Liontrust recorded net inflows of £2,488 million in the financial year to 31 March 2022 (2021: £3,498 million). A reconciliation
of fund flows over the financial year is as follows:
Opening AuMA – 1 April 2021
Net flows
Market and Investment performance
Closing AuMA – 31 March 2022
31 MARCH
2022
£2,488m
Total
(£m)
30,929
2,488
131
33,548
Institutional
(£m)
1,488
(105)
25
1,408
UK Retail
(£m)
20,627
3,025
101
23,753
Multi Asset
(£m)
Offshore Funds
(£m)
7,139
(541)
62
6,660
1,675
109
(57)
1,727
31 MARCH
2021
£3,498m
5
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL HIGHLIGHTS KEY PERFORMANCE MEASURES
Fund management ability and investment performance
The strength of Liontrust’s fund managers is shown by the fact that
over the period from launch or fund manager appointment to the
end of each of the most recent three financial years, on an AuMA
weighted basis, we have consistently had over 60% or more of
our actively managed UK retail AuMA in first quartile funds# (see
Figure 1).
Figure 1 – AuMA weighted quartile ranking since launch or
manager inception (covers 78% of AuMA).
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
FY20
FY21
FY22
First Quartile
Second Quartile
Third Quartile
Fourth Quartile
*This is an alternative performance measure (‘APM’). See
page 30 for further details.
#net of fees and income reinvested. See UK Retail fund
performance on page 8.
Fund flows
Net inflows in the year have remained positive but fallen to
£2,488 million from £3,498 million.
A Profitable and Growing business
Our AuMA has increased by 109% from 31 March 2020
to 31 March 2022 and by 8% from 31 March 2021 to 31
March 2022, reflecting acquisitions, market performance and
net flows (see figure 3).
Figure 3 – AuMA by investor type £’million
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
FY20
FY21
FY22
UK Retail funds (£’m)
Multi Asset (£’m)
Institutional (£’m)
Offshore funds (£’m)
*This is an alternative performance measure (‘APM’). See
page 30 for further details.
Adjusted profit before tax
Our adjusted profit before tax has increased by 64% from
31 March 2021 to 31 March 2022 and by 154% from 31
March 2020 to 31 March 2022. The 2021 adjusted profit
before tax has been restated, see note 7.
Figure 2 – Net flows £’million
Figure 4 – Adjusted profit before tax* £’million
£4,000
£3,500
£3,000
£2,500
£2,000
£1,500
£1,000
£500
£0
120
100
80
60
40
20
0
FY20
FY21
FY22
FY20
FY21
FY22
*This is an alternative performance measure (‘APM’). See
page 30 for further details.
*This is an alternative performance measure (‘APM’). See
page 30 for further details.
6
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL HIGHLIGHTS
SPLIT OF AUMA
BY PRODUCT TYPE
BY INVESTMENT PROCESS
UK Retail
Institutional
Multi Asset
Offshore funds
70%
4%
20%
5%
Economic Advantage
27%
Cashflow Solution
Multi Asset
Global Equities
Global Fixed Income
3%
20%
9%
2%
Sustainable Investments 39%
UK RETAIL FUND
PERFORMANCE
The strength of Liontrust’s fund management capability is shown
by the weighted average AuMA of our actively managed unit
trusts and ICVCs. Since launch or since the fund managers
were appointed 64% were in the first quartile.
Figure 1 – AuMA weighted quartile ranking since launch or
launch/manager inception
%age of AuMA covered
First Quartile
Second Quartile
Third Quartile
Fourth Quartile
64%
27%
8%
1%
7
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL HIGHLIGHTS UK Retail Fund Performance (Quartile ranking)
Detailed quartile rankings by fund over one, three and five years and since launch date or the fund manager was appointed are
shown in the table below:
Quartile ranking
– Since Launch/
Manager
Appointed
Quartile
ranking
- 5 year
Quartile
ranking
- 3 year
Quartile
ranking
- 1 year
Launch Date/
Manager
Appointed
Economic Advantage funds
Liontrust UK Growth Fund
Liontrust Special Situations Fund
Liontrust UK Smaller Companies Fund
Liontrust UK Micro Cap Fund
Sustainable Future funds
Liontrust Monthly Income Bond Fund
Liontrust SF Managed Growth Fund
Liontrust SF Corporate Bond Fund
Liontrust SF Cautious Managed Fund
Liontrust SF Defensive Managed Fund
Liontrust SF European Growth Fund
Liontrust SF Global Growth Fund
Liontrust SF Managed Fund
Liontrust UK Ethical Fund
Liontrust SF UK Growth Fund
Global Equity funds1
Liontrust Balanced Fund
Liontrust China Fund
Liontrust Emerging Market Fund
Liontrust Global Smaller Companies Fund
Liontrust Global Alpha Fund
Liontrust Global Dividend Fund
Liontrust Global Innovation Fund
Liontrust Global Technology Fund
Liontrust Income Fund
Liontrust India Fund
Liontrust Japan Equity Fund
Liontrust Latin America Fund
Liontrust US Opportunities Fund
Cashflow Solution funds
Liontrust European Growth Fund
Global Fixed Income funds
Liontrust Strategic Bond Fund
1
1
1
1
2
2
1
1
1
2
3
1
2
2
1
4
2
1
1
2
1
3
1
4
2
1
1
1
3
1
1
1
1
1
1
2
1
1
2
1
1
1
1
1
3
4
1
1
1
1
2
1
4
3
2
1
1
—
2
1
1
1
1
1
2
2
1
1
1
1
1
2
1
3
4
3
1
1
2
2
2
2
1
3
2
1
3
1
3
1
2
2
3
4
4
4
4
3
4
4
4
1
3
3
4
1
4
4
1
1
1
3
3
3
1
4
25/03/2009
10/11/2005
08/01/1998
09/03/2016
12/07/2010
19/02/2001
20/08/2012
23/07/2014
23/07/2014
19/02/2001
19/02/2001
19/02/2001
01/12/2000
19/02/2001
31/12/1998
31/12/2004
30/09/2008
01/07/2016
31/12/2001
20/12/2012
31/12/2001
15/12/2015
31/12/2002
29/12/2006
22/06/2015
03/12/2007
31/12/2002
15/11/2006
08/05/2018
Source: Financial Express to 31 March 2022 as at 5 April 2022, 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 or UK authorised ICVCs (primary share class).
1Liontrust Russia Fund is not included as it is currently suspended and in an IA sector that is not rankable (e.g. Specialist).
8
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL HIGHLIGHTS STRATEGIC REPORT
Chair’s Statement
Chief Executive’s report
Our strategy
Our business model
Financial review
Sales and marketing review
Operations review
Principal risks and mitigations
Our People, Sustainability and Corporate Responsibilities
10
12
14
20
26
34
40
42
52
CHAIR’S STATEMENT
Introduction
I am delighted to report that Liontrust has performed strongly
over the past year, continuing the excellent progress made in
previous years.
of all the work Liontrust has undertaken this year and I would
like to thank all colleagues and the Executive Directors for
their dedication, hard work and contribution to the ongoing
success of the Group.
Strategic overview
From a financial perspective, the Group has increased profits
before tax, the profitability of the business, earnings and
dividends paid to shareholders.
I also welcome our new colleagues from Majedie to the
Liontrust family. They bring great expertise and experience
across the business and will help drive the future growth of
the Company.
Strategically, Liontrust delivered strong net sales, increased
its AuMA and agreed the acquisition of Majedie Asset
Management (which completed in April 2022) even while
Covid lockdowns were still operational. From an investment
perspective, Liontrust has maintained strong long-term fund
performance and has also made progress in integrating ESG
considerations in the investment thinking of the Group’s teams.
These results demonstrate Liontrust’s strong navigational skills
during challenging environments and reflect the Company’s
sound positioning for ESG and for future growth. I am proud
To ensure this continues, Liontrust is focused on providing
outstanding service and continuing to provide investment
funds rooted in the robust investment processes of its teams. In
times of uncertainty, investors know that Liontrust’s investment
teams are adhering to their well-established processes. These
processes aim to deliver a financial return for investors and,
in the case of funds managed by the Sustainable Investment
team, allocate capital to investments that are helping to solve
global problems relating to the environment and society.
Investors expect Liontrust to explain and evidence its
processes with regard to ESG and Ssustainability. This
comes hand in hand with greater transparency requirements
from EU regulation, which the UK and other regions will be
quick to emulate, and the need to take action to avoid the
worst impacts of global warming. Liontrust plans to make
considerable strides in this space over the next fiscal year.
It is the Group’s full intention to become supporters ofThe
Group is committed to support the Net Zero Asset
Managers’ Initiative, to further the integration of ESG
considerations into Liontrust’s mainstream investment
processes, and to link actions to the Group’s strategy,
internal governance structures and the Executive
Directors’ remuneration.
This provides a solid platform on which the Group can
expand its expertise to ensure that Liontrust’s offering
in ESG and sSustainable investment is fit for purpose
for the next decade.
Similarly, investors and stakeholders expect Liontrust
to manage its business sustainably. For us, this means
abiding by local and regional laws, managing our
key exposures well, treating our customers fairly, and
continuing to increase our transparency about what we
do, how we do it and what impact this has on our funds
and our business.
Like other asset managers, the Group aims to be more
diverse and inclusive and has taken steps this year to do
that, including through hosting a Women’s Forum Discussion
in celebration of International Women’s Day
10
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT “ These results show how well Liontrust has navigated the
challenges of the past couple of years and reflects the
efficient running of the business and the foundations
that have been put in place over the long term.”
ALASTAIR BARBOUR
CHAIR
£2.5 b
Liontrust generated net
inflows of £2.5 billion for
the financial year to
31 March 2022
and activities to celebrate Pride Month. We are continually
striving to make greater progress in terms of diversity and
inclusion and will work to ensure that these factors are linked
directly to the Group’s strategy and reward. The Group will
provide evidence of the impact of this work.
Board changes
We have continued to strengthen the Board with the
appointment of three Non-executive Directors over the past
year: Rebecca Shelley, Quintin Price and Emma Howard
Boyd CBE. They bring a wealth of diverse experience from
working in financial services, serving on public company
boards and with environmental agencies and the public
sector.
Rebecca joined the Board in November 2021 and is Senior
Independent Director. Rebecca was Group Communications
Director of Tesco Plc and a member of their Executive
Committee and later was Group Corporate Affairs Director
and a member of the Global Executive Committee of TP ICAP.
Rebecca is also a Non-executive Director at Sabre Insurance
Group Plc and Hilton Foods Group Plc.
Quintin, who joined the Board in July 2021, has 30
years’ experience at a senior level for a number of leading
investment companies, including Head of Alpha Strategies
and a member of the Global Executive Committee at
BlackRock. Quintin is a Non-executive Director of Aperture
Investors LLC, a New York based fund manager, and F&C
Investment Trust Plc.
Food and Rural Affairs and interim Chair of the Green Finance
Institute. Emma’s experience will be invaluable as we focus
on our responsible and Sustainable investing.
Results
Adjusted profit before tax was £96.556 million (2021:
£58.987 million, restated). Adjusted profit before tax 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 7 below
for a reconciliation of adjusted profit before tax.
Dividend
These excellent results have enabled the Board to declare a
second interim dividend of 50.0 pence per share (2021: 36.0
pence) bringing the total dividend for the financial year ending
31 March 2021 to 72.0 pence per share (2021: 47.0 pence
per share), an increase of 53% compared with last year.
The second interim dividend will be payable on 5 August 2022
to shareholders who are on the register as at 1 July 2022,
the shares going ex-dividend on 30 June 2022. Last day for
Dividend Reinvestment Plan elections is 15 July 2022.
Looking forward
I am confident that Liontrust will continue to meet all of our
strategic objectives given the strength of our investment teams
and their processes, the quality of our colleagues and the
processes in place across the business.
Emma has held a number of non-executive and advisory
roles since leaving Jupiter Asset Management as Director,
Stewardship, including Chair of the Environment Agency, an
ex officio board member of the Department for Environment,
Alastair Barbour
Non-executive Chair
21 June 2022
11
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT CHIEF EXECUTIVE’S REPORT
Introduction
Liontrust has enjoyed another successful year of growth as
we continued to deliver positive outcomes for investors. Your
Company’s success has been driven by the ability to generate
impressive investment performance over the long term, develop
excellent client relationships and service, build a powerful
brand, provide regular and relevant communications, and
ensure a strong infrastructure for the business.
We generated net inflows of £2.5 billion in the financial year to
meet the third pillar of our strategic objectives that is to expand
our distribution and products, and in the 2021 calendar year
Liontrust had the second highest net retail sales in the UK and the
fifth highest gross retail sales according to the Pridham report.
Investment performance
Liontrust has met the second pillar of our strategic objectives
to deliver strong long-term investment performance by
continuing to deliver impressive investment performance over
the long term. Over five years to 31 March 2022, 99% of
Liontrust’s UK-domiciled funds were in the 1st or 2nd quartile
of their respective IA (Investment Association) sectors and over
three years this percentage was 98%.
In January 2022, it was announced that 12 of the Liontrust
funds were awarded the 5-Crown rating from FE fundinfo,
reiterating the breadth of our investment capability. This has
also been demonstrated by the independent recognition
Liontrust has received over the past year, with three of the
investment teams – Sustainable Investment, Multi-Asset and
Global Equity – winning awards while the other teams –
Cashflow Solution, Economic Advantage and Global Fixed
Income – have all received nominations for fund awards.
Clients demanding a more sustainable outcome from their
investments continue to drive strong flows into our Sustainable
Future funds, with the team celebrating their 21st anniversary
in February 2022. The team’s AuMA grew from £10.24
billion on 31 March 2021 to £13.23 billion a year later,
and research shows that professional intermediaries and
retail investors regard Liontrust as having the best sustainable
investment team (Source: Research in Finance).
Also in line with the third pillar of our strategy, we
have seen growing demand for a broader range
of funds over the year, with European Growth
and Global Dividend attracting significant
is
interest. European Growth, which
managed by the Cashflow Solution team,
is in the first quartile of its IA sector over 1,
3 and 5 years, as well as since launch,
and offers a complementary investment
process to many of its peers (Source:
Financial Express to 31 March 2022 as
at 5 April 2022, bid-bid, total return, net
of fees, based on primary share classes).
experienced
Liontrust
a more
challenging period for short-term
performance over the last few months
of the financial year given the market
rotation from quality growth stocks
to value companies. This rotation
rising
has been exacerbated by
inflation and subsequent increases in
interest rates in the UK and US, with the
former partly as a result of supply chain
issues caused by the ongoing effects of the
pandemic and the war in Ukraine.
12
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT In the final quarter of the financial year,
Liontrust had net outflows of £0.4 billion,
which reflected the negative sentiment
among investors generally. The IA reported
this as the first quarter of net negative retail
flows for the industry since the start of the
pandemic in 2020.
The Liontrust investment teams will continue
to apply the distinct and robust investment
processes that have served them well
over the long term. Our teams’ investment
processes have been performing as we
would expect given the market environment,
and the fund managers remain confident about the long-term
prospects for the companies in their portfolios.
The teams have generally made few changes to the companies
they are invested in because of their belief in their long-term
business models and the concomitant competitive advantages
that support them. They have identified opportunities to add
to existing holdings at cheaper valuations and in some cases
invest in companies that were previously considered too
expensive.
In 2021, Liontrust was named Asset Manager of the Year
at the Financial News Awards, the Best Fund Group at the
Shares Awards and Global Group of the Year at the Investment
Week Fund Manager of the Year Awards. These demonstrate
the engagement and recognition that Liontrust has generated
among institutional investors, wealth managers, financial
advisers and retail investors.
Diversification
This helps our strategy of diversifying distribution to ensure
the continued growth of our AuMA. This diversification will
be enhanced further by the acquisition of Majedie Asset
Management, which we announced in December 2021 and
12
In January 2022, it was
revealed that 12 of the
Liontrust funds have the
5-Crown rating from
FE fundinfo
completed after the end of the financial
year on 1 April 2022.
An area that offers us further potential to
grow our distribution is continental Europe.
In October 2021, we added to our
proposition through the launch of the Irish-
domiciled Liontrust GF Sustainable Future
Multi-Asset Global Fund, which brings a
strategy available in the UK for more than
20 years to European investors. Since
announcing the proposed acquisition of
Majedie, we have seen potential demand
for these funds from Europe as well,
including the Liontrust GF Tortoise long/short equity Fund.
Liontrust has also made progress in achieving the first pillar
of our strategic objectives to be a responsible company and
investor. This includes the integration of ESG into the processes
of our investment teams, the expansion of engagement and
voting, a commitment to the Net Zero Asset Managers’
initiative, and action to increase diversity and inclusion across
the business. While we are pleased with the progress Liontrust
is making, we have set ourselves further targets to reach over
the next year and beyond.
The fifth pillar of our strategic objectives is to enhance the
investors’ experience. Our new website that went live in March
2022 and wider digital marketing strategy are designed to give
clients and investors the information and content they want and
in the way they want to consume it while also enhancing their
online experiences with Liontrust. The development of our digital
marketing will amplify the Liontrust brand and increase awareness
of and engagement with the funds and investment teams.
John Ions
Chief Executive
21 June 2022
“ In 2021, Liontrust was named Asset Manager of the Year at the Financial News
Awards, the Best Fund Group at the Shares Awards and Global Group of the Year
at the Investment Week Fund Manager of the Year Awards. These demonstrate
the engagement and recognition that Liontrust has generated among institutional
investors, wealth managers, financial advisers and retail investors.”
JOHN IONS
CHIEF EXECUTIVE
*Source: Financial Express, as at 31.03.22, total return, net of fees, income reinvested. This excludes the Liontrust Multi-Asset Funds,
most of which do not have sector benchmarks, and funds in the IA Specialist sector. These funds make up 78% of Liontrust’s total AUMA.
13
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT
OUR STRATEGY
Liontrust has six principal strategic objectives:
01
Be a responsible
company and investor
02
Deliver strong
long-term investment
performance
03
Expand our distribution
and products
04
Acquire and
develop talent
05
Enhance the
investor experience
06
Ensure strong
operations and
infrastructure
14
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT 1 Be a responsible company and investor
Asset managers have a key role to play in providing capital to
enable businesses to grow and in helping investors to achieve
their financial objectives. We also have an important role
to play in supporting businesses and innovative companies,
working to allocate capital towards positive outcomes including
delivering products and services that benefit the economy
and society. Liontrust aims to achieve this through the use of
active management and proprietary investment processes to
identify companies that can generate sustained growth and by
investing in businesses for the long term.
We have committed to integrating sustainability appropriately
throughout the business, which includes publishing our
Responsible Investment policy. Liontrust is a signatory to the
PRI, a UN supported network of investors, which works to
promote sustainable investment through the incorporation of
ESG factors into investment decision-making.
We have been working to provide each team with the
information and support needed to allow it to integrate ESG,
ensuring its investment process is enhanced and complemented
by this work rather than imposing a centralised solution.
We are committed to continue our work on achieving the following:
• enhancing our ESG data and analytics for all our investment
strategies
• training our staff in our sustainability objectives
• investing in our company engagement capacity and resourcing
• disclosing how we integrate sustainability in each strategy
and across the company
• increasing our reporting for funds on their ESG and climate
characteristics
• improving our aggregated company reporting
Outcomes: We continue to work towards integrating ESG
into our investment teams’ approaches with teams at different
stages of integration. The Sustainable Investment Team has a
fully integrated process, a summary on other teams is included
on page 60.
A key objective is to support the goals of the Paris Agreement
in limiting global warming to well below 2 degrees Celsius,
and preferably to 1.5, compared to pre-industrial levels.
To this end, Liontrust committed in May 2022 to become a
signatory of the Net Zero Asset Managers’ initiative and to
limit warming to 1.5C in Scope 3 investments, in addition to
scrutinising our Scope 1 and 2 emissions that are currently
operationally neutral through offsetting. As part of our efforts,
Liontrust has started disclosing the carbon emissions of our
single strategy equity funds, fulfilling our commitments to the
Montréal Carbon Pledge.
Liontrust’s investment teams have expanded their engagement
and voting. In 2021, the teams met 614 companies, 155
of these engagements were conducted by the Sustainable
Investment
financial
team. These meetings covered
performance and strategy as well as ESG matters, with 468
ESG issues being raised. This engagement has influenced,
among others, companies’ approaches to the energy
transition, diversity and inclusion, remuneration, and the
Workforce Disclosure Initiative.
15
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT
2 Deliver strong long-term investment performance
Liontrust focuses only on managing funds and portfolios
in which we have particular expertise. All teams operate a
rigorous and repeatable investment process. We believe these
processes are key to delivering strong long-term performance
and effective risk control. Our funds strive to outperform their
relevant benchmarks and the average returns of their respective
peer groups over the medium to long term.
Outcomes: Over five years to 31 March 2022, 99% of
Liontrust’s UK-domiciled funds were in the 1st or 2nd quartile
of their respective IA sectors (source: Financial Express, as at
31.03.22, total return, net of fees, income reinvested. This
excludes the Liontrust Multi-Asset Funds, most of which do not
have sector benchmarks, and funds in the IA Specialist sector).
3 Expand our distribution and products
We seek to distribute our funds and portfolios to as broad a
client base in the UK and internationally as possible, striving
continually to raise awareness and knowledge of Liontrust and
our funds, widen the number of clients who invest with us,
deepen our relationships with existing investors and increase
our assets under management. We add to our product range
when we possess the fund management expertise and there is
investor demand.
Outcomes: Liontrust generated net inflows of £2.5 billion
for the financial year ended 31 March 2022. AuMA were
£33.5 billion at the same date, an increase of 8.5% over the
financial year.
Over three years, 98% of UK-domiciled funds in the 1st or 2nd
quartile of their respective IA sectors.
Liontrust recorded the 2nd highest net retail sales in the UK in
2021 and the 5th highest gross retail sales in the UK over the
calendar year (Source: Pridham Report).
In 2021 Liontrust was named Asset Manager of the Year at the
Financial News Awards, the Best Fund Group at the Shares
Awards and Global Group of the Year at the Investment Week
Fund Manager of the Year Awards 12 funds have the 5-Crown
rating from FE fundinfo.
We launched the Liontrust GF Sustainable Future Multi-Asset
Global Fund in October 2021 to provide European investors
with access to a strategy that has been available in the UK for
more than 20 years.
In December 2021, we announced the acquisition of Majedie
Asset Management. This transaction was completed on 1 April
2022 and has continued our diversification and expansion,
both through distribution to institutional investors and investment
capability, as well as adding £5.2 billion to our AuMA.
A YEAR OF SUCCESS
June 2021
Won Global Group of the Year
at the Fund Manager of the Year
Awards
July 2021
Quintin Price joined as Non-
executive Director
Announced net inflows of over
£1 billion in first quarter of the
financial year
October 2021
Announced net inflows of over
£1.1 billion in second quarter of
the financial year
November 2021
Rebecca Shelley joined as a Non-
executive Director and subsequently
as Senior Independent Director
Start of the World Market Review
Multi-Asset roadshow around the UK
COP26 client event with the
Sustainable Investment team
Won Asset Manager of the Year
at the Financial News Asset
Management Awards
Won Fund Group of the Year at
the Shares Awards
16
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT
4 Acquire and develop talent
We will continue to recruit fund managers who have excellent
track records, expertise in their respective asset classes and
who use rigorous and repeatable investment processes. We will
make acquisitions that enhance and grow our business. Liontrust
is proud of the people who work at the company and we are
investing in their training, qualifications and development as
part of our strategy to retain talented fund managers, partners
and employees. We are seeking greater diversity across the
company as we believe this enhances the performance of
businesses and leads to better decision making.
The quality and performance of our fund management teams
is one of our key potential competitive advantages. We have
created an environment in which fund managers can focus on
managing money and not get distracted by other day-to-day
aspects of running a business, particularly administration.
Outcomes: The Sustainable Investment team recruited four
graduate trainees during the year: Nancy Kondelidou, Sarah
Nottle, Deepesh Marwaha and Ed Phelps.
The announced acquisition of Majedie Asset Management
during the financial year added the Global Fundamental team
to Liontrust on 1 April 2022.
against five pillars of engagement: Engaging Managers;
Employee Voice; Realising Potential; Organisational Integrity
and Compelling Leadership – we scored above the norm for
every pillar.
During 2021, Liontrust set up the Diversity and Inclusion
Committee. Chaired by our COO/CFO, the Committee provides
feedback and recommendations to the Management Committee,
Nomination Committee and the Liontrust Asset Management PLC
Board. The purpose of the Committee is to look at the challenges
and opportunities around the following topics:
• Preventing and eliminating discrimination,
including
unconscious bias
• Raising awareness of the importance and benefits of diversity
enhancing our culture and innovation
• Ensuring policies and procedures promote diversity across
the company increasing awareness through training,
mentoring and coaching
• Highlighting changes required to promote diversity and
inclusion
• Attracting people from diverse backgrounds to join Liontrust
and the asset management industry in general
In November and December 2021, we undertook our most
recent workforce engagement survey. The overall response rate
was 79%, compared to an industry average of the mid 60s%.
Our engagement index was 74%, sitting 4% above the norm
(Liontrust has been compared against a general normative
database of survey responses from over 150 organisations,
across a variety of sectors. All surveys have been conducted
within the last three years). The survey was benchmarked
Liontrust has been taking several actions to increase diversity and
inclusion and to continue to raise awareness of the importance
of building a workplace that fosters inclusion and equality
for all. This includes hosting a Women’s Forum Discussion on
“Breaking the Bias” in celebration of International Women’s
Day, enhancing Liontrust’s Maternity and Paternity policies,
and a hosting a number of events to promote International
Women’s day and Pride month.
December 2021
Announced agreement to acquire
Majedie Asset Management
January 2022
Emma Howard Boyd CBE joined
the Board as Non-executive
Director
February 2022
Announced that Liontrust had the
2nd highest net retail sales in the
UK in 2021 and 5th highest gross
retail sales
March 2022
New website launches
Rebecca Shelley appointed Senior
Independent Director
17
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT
5 Enhance the investor experience
We aim to provide our investors with exceptional service
and support, striving to be as transparent as possible. We
communicate clearly and frequently with our investors,
regularly updating them on the performance of each of
our funds and portfolios, the effectiveness of the investment
processes applied to each of our funds and portfolios and
the progress of the business as a whole. Liontrust is investing
in developing online services and digital communications to
enhance client services.
Outcomes: The new Liontrust website went live at the end
of March 2022. It has clearer and more efficient customer
journeys; six different user types; improved functionality; and a
greater range of content.
Our client communications has generated
engagement during the financial year. This includes:
increased
• A video we filmed with John Cleese and Jen Wade about
animal conservation was watched almost 120,000 times
across social media
• The first 18 Liontrust Bite-Size videos were viewed more than
97,000 times on LinkedIn
• 56 posts on LinkedIn in the 4th quarter of 2021 generated
total impressions of 392,000
• Total Liontrust website users and sessions increased 28% in
December 2021 compared with December 2020
Liontrust conducted its latest research among our private investors
and professional intermediaries as part of the Assessment of
Value of the UK-domiciled funds in 2021. Our clients were
asked to evaluate 21 different aspects of Liontrust’s service and
communications, and these produced three summary scores.
These scores were:
• 84% are satisfied or very satisfied overall with the Client
Services team at Liontrust
• 74% are satisfied or very satisfied taking into account the
information, materials and/or tools used from Liontrust
• 76% are satisfied or very satisfied taking into account the
aspects of information, materials, communications and client
servicing used or experienced from Liontrust.
Of the issues raised with Client Services, the percentages
resolved were:
• 83% completely
• 6% partially
18
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT 6 Ensure strong operations and infrastructure
We aspire for excellence in administration, risk management
and corporate governance to ensure we can deliver a first-
class service. We have moved our funds to one administrator
to secure a solid foundation from which to support our future
expansion and to ensure we and our investors benefit from
efficiencies. The support provided to our clients, fund managers
and the sales and marketing teams by operations is another key
potential competitive advantage. Having a single Operations
function and fund administrator ensures the fund management,
sales and marketing divisions have the appropriate tools
to be effective, provides executive management with the
performance and risk monitoring information required to
manage the business and supports the requirements of external
stakeholders such as clients, shareholders and regulators.
Outcomes: Liontrust has restructured and strengthened the
Performance and Investment Data teams and is investing in
a new centralised vault to house all data required across
the Group. These developments will enhance further the
performance and analysis of data and attribution analysis
provided to all other departments and intelligence for the
business on the investment teams and their strategies.
19
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT OUR BUSINESS MODEL
Liontrust is a specialist fund management company that was
established in 1995 and was listed on the London Stock
Exchange in 1999. Liontrust invests on behalf of our clients –
institutional investors, professional intermediaries and private
investors – who are primarily, but not exclusively, based in the
UK and Europe. These investments are managed through funds,
portfolios and segregated accounts. As at 31 March 2022,
Liontrust managed £33.5 billion in assets under management
and advice (AuMA) across six investment teams.
These assets are invested with the objective of delivering
strong long-term performance to help our clients to achieve
their investment goals. This is complemented by Liontrust
developing long-term relationships with our clients.
Liontrust also has an important role to play in supporting
businesses and innovative companies, working to allocate
capital towards positive outcomes that benefit the economy
and society. Liontrust takes great pride in our role as active and
responsible investors.
What makes Liontrust distinctive?
EXPERTISE
We focus only on those
areas of investment in which
we have
particular expertise.
PROCESS DRIVEN
Each fund management
team applies rigorous and
documented investment
processes to managing
funds and portfolios to
ensure the way they manage
money is predictable and
repeatable and to prevent
them from investing in stocks
for the wrong reasons.
INVESTMENT FOCUSED
Our fund managers can
concentrate on managing
their funds and portfolios
without being distracted
by other day-to-day
aspects of running an asset
management business.
CULTURE
Everyone at Liontrust is
personally accountable
for their commitments and
actions, and seeks to uphold
the highest standards of
integrity in all of our actions.
ACTIVE MANAGEMENT
Our fund managers have
the courage of their
convictions in making
investment decisions,
ensuring our funds and
portfolios are truly actively
managed for the long-term
benefit of our clients and
investors.
STRONG AND
DISTINCTIVE BRAND
Our brand is accessible and
engaging, and represents
our strength, conviction,
independence, innovation,
excellence, transparency
and ethics.
COMMUNITY
ENGAGEMENT
We focus on financial
education, providing
opportunities for young
people and wildlife
conservation.
20
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT 21
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT HOW WE GENERATE SHAREHOLDER VALUE
Sustainable earnings growth
We look to grow our earnings by increasing our AuMA through sales, investment
performance, new products and acquisitions while maintaining pricing. Increased
AuMA delivers greater revenues which in turn support the equity value of your Company.
Consistency of earnings
Attracting and retaining clients maintains AuMA and fees. Liontrust seeks to
achieve this through delivering the right products for our investors, strong long-term
investment performance, excellent service, communications and administration,
and memorable experiences.
Business discipline
Managing the business efficiently controls costs and therefore increase profitability
with scale. This is achieved through strong infrastructure, operations, risk management
and governance.
22
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT HOW WE ACHIEVE THIS
Investment Management
The quality and performance of the investment management
teams is one of Liontrust’s key competitive advantages and
core to helping investors to achieve their financial goals.
We have a single division of six fund management teams
(which increased to seven on 1 April 2022 with the addition of
the Global Fundamental team from the Majedie acquisition) that
manage a range of funds, portfolios and segregated accounts
using distinct investment processes supported by a centralised
trading team. There is no house view at Liontrust, and each of
the teams manages funds according to their own investment
process and market views without being distracted by other day-
to-day aspects of running an asset management company.
Liontrust believes robust and transparent investment processes
are critical to delivering long-term performance and effective
risk control. The teams wholeheartedly to subscribe to the
belief that robust active management can deliver enhanced
risk adjusted returns in the long term.
Staying true to their documented investment processes helps to
create an in-built risk control for our fund managers, especially
in more challenging environments, by preventing them from
investing in companies and funds for the wrong reasons.
Documenting an investment process means an investor in our
funds and portfolios knows exactly how each team manages
their investments.
Liontrust ensures that appropriate and prudent levels of risk are
taken to meet the investment objectives and policies of all our
funds.
Distribution
The strength of the Liontrust brand, the breadth and depth of
our client base and the relationships we have with our investors
are competitive advantages.
to institutional investors, discretionary fund managers, wealth
managers, financial advisers and private investors. Outside
the UK, we are focused on the wholesale market, primarily
family offices, private banks, wealth managers and multi-
managers in a number of countries. Liontrust has developed
strong relationships across the different distribution channels.
We have developed a strong brand through our marketing
activities over, including events, regular communications,
advertising, sponsorships, PR and both print and digital
communications. Digital is a key, and ever-more important,
driver of our brand profile and engagement, including
through our website, social media, email communications
and digital advertising and promotions. The regular research
we conduct shows that Liontrust consistently scores well for
brand awareness, understanding and positive opinion among
financial intermediaries in the UK.
Operations
The support provided to our clients, fund managers and
the sales and marketing teams by operations is another
key competitive advantage. We have a single Operations
division, designed to support a fast-growing business, and
have moved to one fund administrator – Bank of New York
Mellon. Having a single Operations function and fund
administrator ensures the fund management and sales and
marketing divisions have the appropriate tools to be effective,
provides executive management with the performance and
risk monitoring information required to manage the business
and supports the requirements of external stakeholders such
as clients, shareholders and regulators.
Risk Management
Liontrust takes a cautious and pro-active approach to risk
management, recognising the importance of understanding
risks to the business, setting and monitoring risk appetite and
implementing the systems and controls required to mitigate them.
Our sales and marketing teams promote our funds and
portfolios in the UK and internationally. In the UK, we market
For more on risk management, see the section on Principal
Risks.
The Sustainable team’s AuMA has continued to grow, from £10.24 billion on 31 March
2021 to £13.23 billion a year later, and research shows that professional intermediaries
and retail investors still regard Liontrust as having the best sustainable investment team
(Source: Research in Finance).
23
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT Liontrust ensures that appropriate and prudent levels of risk are
taken to meet the investment objectives and policies of all our
funds. In general, risk within a fund is controlled and monitored
in two ways: the investment process and predetermined risk
controls monitored by the Portfolio Risk Committee that is
Chaired by the CRO.
Governance
Liontrust takes its corporate governance responsibilities very
seriously. The first of the six pillars of Liontrust’s strategy is to be
a responsible company and investor, which involves upholding
the highest standards of integrity in all of our actions and
striving for excellence in everything we do.
Liontrust has committed to integrating sustainability appropriately
throughout the business. This includes publishing our Responsible
Investment policy, which provides details of our engagement-led
approach and how we manage our stewardship at both the
company level and for individual investment teams, and our
Responsible Capitalism 2022 report, due to be published later
this year, which outlines the successes, where we need to do
more and our priorities for the year ahead. Liontrust has also
committed to playing our part in helping to deliver the goals of
the Paris Agreement to limit global warming to 1.5°C.
We are seeking greater diversity across the company as we
believe this enhances the performance of businesses and leads
to better decision making, innovation and growth through
independent thinking and new ideas.
The Board of Directors is responsible for organising and
directing the affairs of the Company in the best interests of the
shareholders, meeting legal and regulatory requirements and
ensuring good corporate governance practices.
This is supported by Liontrust’s values
EXCELLENCE
We strive for excellence in our products, service and
people so we can have a positive impact on investors,
stakeholders and society. We pride ourselves on the quality
of our investment teams and the knowledge and ability of
our staff across the business. We seek to provide first-class
service and we are transparent about the management
of our funds, portfolios and the business, communicating
clearly and frequently.
SUSTAINABILITY
Liontrust is committed to integrating sustainability throughout
the business including: being a responsible investor; climate
change and the environment; diversity and inclusion; human
rights; and being a good corporate citizen. Good governance
and stewardship, sustainability and social impact are important
in delivering longer-term investment performance. Liontrust
believes that a diverse workforce promotes innovation and
growth through independent thinking and new ideas.
COURAGE
We do not follow the herd and have the courage to have
independence of thought. Our fund managers have the
courage of their convictions through their differentiated
and rigorous investment processes. The business has the
courage to do the right thing, being decisive, innovative
and nimble.
RESPONSIBILITY
Everyone at Liontrust is personally accountable for their
commitments, actions and for delivering on their promises.
We are responsible for supporting each other, collaborating
and being open to challenge and debate. All staff have
a responsibility to act in the best interests of investors and
shareholders. We seek to uphold the highest standards of
integrity in all of our actions.
24
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT HOW THIS BENEFITS OUR STAKEHOLDERS
OUR CLIENTS
Investment excellence,
rigorous processes, wide
choice of funds, strong
service and communications,
robust operations and risk
management
OUR COMMUNITY
Sustainability being
integrated throughout the
business, promoting financial
education and numeracy
among school pupils, and
wildlife conservation
OUR
SHAREHOLDERS
Growing, sustainable and
profitable business, and
successful acquisitions
OUR
COLLEAGUES
Empowerment and
responsibility, and innovative
working environment
25
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT FINANCIAL REVIEW
Financial performance
Profit before tax increased to £79.291 million (2021:
£34.929 million). The profit before tax for the year includes
£7.1 million of acquisition and reorganisation costs incurred
as a result of the acquisition and reorganisation of the Architas
UK Multi-Asset business and Majedie acquisition costs.
Adjusted profit before tax*, which adjusts for amortisation
costs and other costs relating to acquisitions and reorganisation
increased to £96.556 million from £58.987 million (restated
– see note 7) last year, reflecting the increased fund flows,
growth in AuMA and sustained performance fees – reflecting
the successful delivery of these pillars of our strategy.
Table (a) Analysis of financial performance
Year ended
31 Mar 22
£’000
Year ended
31 Mar 21
(restated)
£’000
Gross Profit excluding
performance fees
218,750
150,592
Performance fees
12,595
13,692
Realised gain on sale of
financial assets
Realised gain on sale of
Asia fund
-
-
147
250
Year on
year
change
45%
-8%
Administration expenses
(152,058)
(129,759)
Profit before tax
79,287
34,922
17%
127%
Adjustments – see note 7
on page 157
17,265
24,058
Adjusted operating profit
96,552
58,980
64%
Interest receivable
4
7
Adjusted profit before tax
96,556
58,987
64%
See note 7 to the financial statements for a reconciliation of
adjusted profit before tax to profit for the year.
45%
Gross profit excluding
performance fees increased
by 45% compared to
last year and by 107%
compared to two years ago.
Gross profit
Gross profit increased by 45% compared to last year and by
107% compared to two years ago.
Figure 1 – Gross profit £’000
250,000
200,000
150,000
100,000
50,000
0
FY20
FY21
FY22
Performance fee revenues (£’000)
Non-performance fee revenues (£’000)
Average AuMA
Average AuMA increased by 47% compared to last year
and by 103% over two years (see Figure 1 below), reflecting
acquisitions, net flows and investment performance.
Figure 2 – Average AuMA £’billion
£40
£35
£30
£25
£20
£15
£10
£5
£0
FY20
FY21
FY22
26
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT
Adjusted profit before tax and operating margin*
Adjusted profit* before tax increased to £96.556 million from
£58.987 million (restated) last year and from £38.036 million
(not restated) two years ago reflecting the increase in Average
AuMA, performance fees and recent acquisitions. This in turn
is reflected in strong growth in Adjusted basic and Diluted
earnings per share (see Figures 3 and 4).
Figure 3 – Adjusted profit before tax* £’million
120
100
80
60
40
20
0
FY20
FY21
FY22
*These are alternative performance measures (‘APM’). See
page 30 for further details. FY20 APMs have not been
restated. FY21 APMs have been restated.
Figure 4 – Adjusted basic and diluted earnings per share
excluding performance fees* (pence)
140
120
100
80
60
40
20
0
FY20
FY21
FY22
Adjusted Basic earnings per share
Adjusted Diluted earnings per share
Adjusted operating margin (calculated as Adjusted operating
profit divided by Gross profit) reflects the strong operating
gearing and operational cost efficiency in the business (see
Figure 5 below).
Figure 5 – Adjusted operating margin*
42%
40%
38%
36%
34%
32%
30%
FY20
FY21
FY22
Figure 6 – Adjusted operating profit* as % of Average –
AuMA
29%
28%
27%
26%
25%
24%
23%
22%
21%
FY20
FY21
FY22
£97m
Adjusted operating profit*
increased to £96.556 million
from £58.987 million
last year
27
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT Administration expenses
The largest component of our costs, in common with other
service companies, is Director, member and employee related
expenses. Staff compensation as a percentage of Gross profit
reduced reflecting increased revenues and stringent cost
control. See Figure 7 below.
Figure 7 – Director, employee and member related expenses
as a percentage of Gross profit
46%
45%
44%
43%
42%
FY20
FY21
FY22
Member and employee related costs are the sum of Director
and employee costs, pensions, members’ drawings charged
as an expense, and members’ advance drawings (where
applicable).
*These are alternative performance measures (‘APM’). See
page 30 for further details.
Dividend
The Board has considered current market environment, the
financial performance for the Group in the current year and
its cash generation abilities in future years, and is declaring
a second interim dividend of 50.0 pence per share (2021:
36.0 pence) which will result in total dividends for the
financial year ending 31 March 2022 of 72.0 pence per
share (2021: 47.0 pence) (See Figure 9 below). This reflects
a dividend margin (dividend per share divided by Adjusted
diluted earnings per share excluding performance fees) of
59% (See Figures 9 and 10 below).
Figure 9 – Dividend per share (pence)
80
70
60
50
40
30
20
10
0
FY20
FY21
FY22
*These are alternative performance measure (‘APM’). See
page 30 for further details.
Figure 10 – Dividend margin*
Non-staff compensation expense as a percentage of Gross
Profit also fell to 13.6% (2021: 15.2%, 2020: 20.7%).
100%
Figure 8 – Other administration expenses as a percentage of
Gross profit
22%
20%
18%
16%
14%
12%
10%
FY20
FY21
FY22
90%
80%
70%
60%
50%
FY20
FY21
FY22
28
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT Dividend policy
Our policy is to grow our dividend progressively in line with
our view of the underlying adjusted earnings per share on a
diluted basis (excluding performance fees), and cash flow of
Liontrust.
as they fall due, up to 31 March 2025. The Directors’
assessment has been made with reference to the Group’s
current position and strategy, the Group’s risk appetite, the
Group’s financial forecasts, and the Group’s principal risks
and mitigations, as detailed in the Strategic Report.
When setting the dividend, the Board looks at a range of
factors, including:
• the macro environment;
• the current balance sheet; and
• future plans.
The three-year period is consistent with the Group’s current
strategic forecast and ICAAP. The forecast incorporates
both the Group’s strategy and principal risks. The forecast is
approved by the Board at least annually. This formal approval
is underpinned by regular Board discussions of strategy and
risks, in the normal course of business. The forecast is updated
as appropriate.
It is our intention that dividends will be declared and paid half
yearly.
Statement of viability
In accordance with provision 31 of the 2018 revision of the
Code, the Directors have assessed the prospects of the Group
over a longer period than the 12 months required by the
Going Concern provision.
The Directors confirm that they have a reasonable expectation
that the Group will continue to operate and meet its liabilities,
The three-year strategic forecast considers the Group’s profitability,
cash flows, dividend payments, share purchases, seed capital
and other key variables. These metrics are subject to sensitivity
analysis, which involves flexing a number of the main assumptions
in the forecast, both individually and in unison. Given the market
volatility and economic uncertainty due to the ongoing Covid-19
pandemic and global geopolitical tensions, management
produced additional sensitivity scenario analysis for the strategic
forecast and has considered mitigating actions should any of
these scenarios occur. Scenario analysis is also performed as
part of the Group’s ICAAP, which is approved by the Board.
29
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT ALTERNATIVE PERFORMANCE MEASURES (‘APMS’)
The Group uses the following APMs:
ADJUSTED PROFIT BEFORE TAX*
Definition: Profit before taxation, amortisation, and non-recurring
items (which include: professional fees relating to acquisitions;
restructuring and severance compensation related costs).
Reconciliation: Note 7.
Reason for use: This is used to present a measure of profitability
of the Group which is aligned to the requirements of
shareholders, potential shareholders and financial analysts, and
which removes the effects of non-cash and non-recurring items,
which eases the comparison with the Group’s competitors who
may use different accounting policies and financing methods.
Specifically, calculation of Adjusted profit before tax excludes
amortisation expenses, and costs associated with acquisitions
and their integration into the Group. It provides shareholders,
potential shareholders and financial analysts a consistent year
on year basis of comparison of a “profit before tax number”,
when comparing the current year to the previous year and also
when comparing multiple historical years to the current year, of
how the underlying ongoing business is performing.
ADJUSTED OPERATING PROFIT
Definition: Operating profit before interest and amortisation,
and non-recurring
include: professional
fees relating to acquisitions; restructuring and severance
compensation related costs).
(which
items
Reconciliation: Note 7.
Reason for use: This is used to present a measure of
profitability of the Group which is aligned to the requirements
of shareholders, potential shareholders and financial analysts,
and which removes the effects of financing and capital
investment, which eases the comparison with the Group’s
competitors who may use different accounting policies and
financing methods.
Specifically, calculation of Adjusted operating profit before
tax excludes amortisation expenses, and costs associated with
acquisitions and their integration into the Group. It provides
shareholders, potential shareholders and financial analysts a
consistent year on year basis of comparison of a “operating
profit”, when comparing the current year to the previous year
and also when comparing multiple historical years to the current
year, of how the underlying business is performing.
ADJUSTED OPERATING MARGIN
Definition: Adjusted operating profit divided by Gross profit.
Reconciliation: Note 7.
Reason for use: This is used to present a consistent year on
year measure of adjusted operating profit compared to gross
profits, identifying the operating gearing within the business.
GROSS PROFIT EXCLUDING PERFORMANCE FEES
Definition: Gross profit less any revenue attributable to
performance related fees.
Reconciliation: Note 4.
Reason for use: This is used to present a consistent year on
year measure of gross profits within the business, removing the
element of revenue that may fluctuate significantly year-on-year.
ADJUSTED EARNINGS PER SHARE
Definition: Adjusted profit before tax divided by the weighted
average number of shares in issue.
Reconciliation: Note 7.
*This measure is used to assess the performance of the Executive Directors.
30
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT Reason for use: This is used to present a measure of profitability
per share in line with the adjusted profit as detailed above.
ADJUSTED DILUTED EARNINGS PER SHARE
Definition: Adjusted profit before tax divided by the diluted
weighted average number of shares in issue.
Reconciliation: Note 7.
Reason for use: This is used to present a measure of profitability
per share in line with the adjusted profit as detailed above.
OTHER ADMINISTRATION EXPENSE
Definition: a component of administration expenses related to
non-people related costs within the business.
Reconciliation: Note 5.
DIVIDEND MARGIN
Definition: This is the dividends declared for the year
divided by the Adjusted diluted earnings per share excluding
performance fees.
Reconciliation: This can be recalculated with the information
in notes 7 and 9.
Reason for use: This is used to identify the dividend cover versus
adjusted diluted earnings per share excluding performance fees.
ASSETS UNDER MANAGEMENT AND ADVICE (‘AUMA’)
Definition: the total aggregate assets managed or advised by
the Group.
Reconciliation: A detailed breakdown of AuMA is shown in
the Strategic Report
Reason for use: AuMA is a key performance indicator for
management and is used both internally and externally to
determine the direction of growth of the business. When used
intra-month (i.e. AuMA for dates that are not a month end date)
or used at month end but early in the following month then
the AuMA for some accounts, funds or portfolios may not be
the most recent actual AuMA, rather it will be the most recent
available AuMA which may be the previous month end AuMA
or the most recently available AuMA.
AVERAGE ASSETS UNDER MANAGEMENT AND ADVICE
Definition: The average of aggregate assets managed or
advised by the Group during the relevant period.
Reconciliation: Average AuMA for the year is the average of
each month end aggregate AuMA during the relevant period.
Reason for use: Average AuMA shows AuMA without the
volatility of short term net flows and allows for comparability
between years.
NET FLOWS
Definition: Total aggregate sales into Group funds less total
redemptions from Group funds accounts and portfolios. If
positive may also be referred to as “Net inflows” and where
negative as “Net outflows”.
Reconciliation: A detailed breakdown of net flows is shown in
the Strategic Report.
Reason for use: Net flows is a key performance indicator for
management and is used both internally and externally to
assess the organic growth of the business. For certain MPS
accounts, the net flow number is not available from the relevant
administrator, so the net flow number is derived from the
difference between the starting and ending AuMA adjusted
for investment performance, if there is a reliable source for the
investment performance. For certain Model Portfolio Service
accounts where there is no reliable investment performance
benchmark, the flows are not included.
31
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT
DELIVERING THE ASSESSMENT OF VALUE AND
ENGAGEMENT WITH INVESTORS
Every fund, with the exception of two, has an overall fund
score of Green, which means we have assessed them as
delivering value. Aside from 2 funds all others have an overall
fund score as Green.
We strive for excellence in our products, service and people
so we can have a positive impact on our investors and
stakeholders. This approach and commitment to our investors is
reflected in this second annual Assessment of Value of Liontrust’s
UK-domiciled funds.
For the Report, Liontrust has considered whether our funds are
delivering value against seven criteria and then provided
an overall summary for each one. The criteria
and overall assessment are judged
through a RAG (Red, Amber and
Green) scoring system.
32
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT 33
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT SALES AND MARKETING REVIEW
Liontrust generated net inflows of £2.5 billion for the financial
year to 31 March 2022. This helped increase AuMA by 8.5%
to £33.5 billion. The strength of our sales is demonstrated by
the fact that over the calendar year of 2021, Liontrust had the
second highest net retail sales in the UK and the fifth highest
gross retail sales, according to the Pridham Report.
As well as the quality of Liontrust’s investment capabilities these
sales have been driven by the breadth of our client base, strong
relationships, client service, highly effective communications
and a distinctive brand.
Liontrust won the ESG Advocate (Asset Management) Award at
the Portfolio Adviser Wealth Partnership Awards in December
2021, demonstrating the quality of our existing service and
communications. This followed Liontrust being named Asset
Manager of the Year at the Financial News Awards, the
Best Fund Group at the Shares Awards and Global Group of
the Year at the Investment Week Fund Manager of the Year
Awards last year. These awards show Liontrust’s strength and
diversification of distribution to institutional investors, wealth
managers, financial advisers and retail investors.
Clients demanding a more sustainable outcome from their
investments continue to drive flows into our Sustainable Future funds.
The team’s AuMA rose from £10.24 billion on 31 March 2021
to £13.23 billion a year later. Both professional intermediaries
and retail investors continue to identify Liontrust as the best asset
manager for sustainable investment, according to research carried
out for Liontrust by Research in Finance in December 2021. While
37% of professional intermediaries say Liontrust is the leader for
sustainable investment, 28% of retail investors identified Liontrust as
the leader for sustainable investment.
The team’s excellence has been demonstrated by SF Global
Growth winning Best Sustainable & ESG Equity Fund and SF
Managed winning Best Sustainable & ESG Multi-Asset Fund at
the Investment Week Sustainable & ESG Investment Awards in
the autumn of 2021. SF Managed Growth also won the Best
Ethical/Sustainable – Active fund award at the AJ Bell Fund
and Investment Trust Awards.
These followed Liontrust SF Global Growth, SF Managed
Growth and SF Managed all winning awards at Incisive
Media’s Fund Manager of the Year Awards in July 2021.
We continue to seek to diversify sales across our investment
teams and funds, which is one of the strategies set by the
Board of Directors. Over the financial year, for example,
the Distribution team has seen increasing demand for the
European Growth and Global Dividend funds managed by
the Cashflow Solution and Global Equity teams respectively.
to having
Liontrust has been able to move from exclusively virtual
communications
face-to-face meetings with
clients again, both one-to-one meetings and fund manager
presentations to multiple clients, over the course of the year.
The return of events has included the Multi-Asset team’s World
Market Review (WMR) roadshow around the UK. By the end
of March 2022, nearly 1,000 advisers had registered to
attend the roadshow beginning in April 2022 and running
through the spring.
Liontrust has been investing in digital marketing to enhance
further the service we provide and the engagement we
achieve with clients and investors, including through the
launch of our new website at the end of March featuring
distinct customer journeys and personalisation. Our
website and wider digital marketing strategy are
designed to give clients and investors the information
and content they want in the way they want to
consume it while also enhancing their online
experience.
The development of our digital marketing will
enhance the Liontrust brand and increase
awareness of and engagement with the
funds and investment teams. The first
18 Liontrust Bite-Size videos that we
started filming in the autumn of
2021, for example, have been
viewed more than 97,000 times
on LinkedIn.
1,000
Nearly 1,000 advisers
registered for the Multi-Asset
team’s World Market
Review roadshow
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LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT
97k
Liontrust Bite-Size videos
viewed more than 97,000
times on LinkedIn
35
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT LIONTRUST AND FUND AWARDS
We are proud to announce the following awards for Liontrust and our fund management teams in the financial year ended 31
March 2022:
Investment Week Fund Manager
of the Year Awards 2021
Global Group of the Year
Investment Week Fund Manager
of the Year Awards 2021
Managed 40-85% Shares
Investment Week Fund Manager
of the Year Awards 2021
Global Growth
Investment Week Fund Manager
of the Year Awards 2021
Managed – Flexible Investment
Investment Week Fund Manager
of the Year Awards 2021
Global Income
AJ Bell Online Personal
Wealth Awards 2021
Best Multi-Manager Fund Provider
Professional Pensions UK Equity
manager of the year
Professional Adviser Awards 2021
Best ESG Solution for Advisers
Professional Adviser Awards 2021
Multi-Asset Group of the year
Financial News Asset Manager of the Year
Shares Awards Best Fund Group
Moneyfacts Best Multi-Manager Provider
In 2021, Liontrust was named Asset Manager of the Year at the Financial News
Awards, the Best Fund Group at the Shares Awards and Global Group of the Year
at the Investment Week Fund Manager of the Year Awards. These demonstrate the
engagement and recognition that Liontrust has generated among institutional investors,
wealth managers, financial advisers and retail investors.
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LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT
COMMUNITY ENGAGEMENT
Part of Liontrust’s purpose is to have positive outcomes for society
by empowering and inspiring the wider community. There are
currently three key objectives that we are aiming to achieve
through the Liontrust community engagement programmes:
• Raise financial awareness and numeracy throughout society
• Provide opportunities for young people
• Wildlife conservation
Financial Education
Newcastle United Foundation
Liontrust partners with Newcastle United Foundation (NUF)
to provide a numeracy programme, Financial Football. This
is designed to give primary school children a head start in
financial education.
The six-week programme has helped to break down barriers
that children face in understanding and learning about
numeracy and finance, with the aim of improving children’s
understanding of money, as well as giving them the confidence
to thrive in school maths lessons.
Financial Football uses the popularity and profile of Newcastle
United football club to encourage primary school pupils to
engage with maths problems, using real life scenarios such as
buying and selling football players and paying fines for red
cards to teach concepts such as budgeting.
The project, which involves interactive games around football, is
working with Years 4, 5 and 6 pupils and reaching more than
750 primary school children across 17 schools a year. Financial
Football has introduced a new maths education programme to
increase primary school children’s confidence and understanding
of this subject. Newcastle United Foundation enabled Financial
Football to go online during the Covid pandemic. Financial
Football has led to significant improvements in solving money
focused questions:
67%
64%
75%
84%
in numeracy
in addition, subtraction,
in statistics
in ratios
multiplication
37
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT
Liontrust has also supported the building of Newcastle United
Foundation’s community home called NUCASTLE, which
officially opened in March 2022. One of the classrooms at
NUCASTLE is called Liontrust and will be used to work with
all members of the local community. Currently, Newcastle
United Foundation is helping around 65,000 people across
the North-East of England.
10 Ticks
Liontrust has partnered with 10ticks to enable them to deliver
worksheets and new digital maths education to primary schools
across the UK. 10ticks works with 16,258 state primary
schools, which cover approximately 4.7 million children.
10ticks has around 8,000 worksheets suitable for primary
schools covering the entire maths curriculum. 10ticks.com
Mental Maths is a fun and engaging online resource designed
to help support the instant recall of multiplication and division
facts and lots of other mental maths topics with little teacher
intervention. From challenging classmates online to playing
live games across the globe, these stimulating activities are
designed to engage pupils. The pupils can also create their
own avatar and earn certificates and awards to inspire them
to perfect their skills.
The speed evaluation is based on the Beat the Clock game.
How many questions can you answer correctly in 60 seconds?
The game takes a baseline test, then an ongoing average is
kept for each pupil. The percentage improvement is based on
the baseline test to ongoing average score. This improvement is
mapped against the number of times pupils log in to the system.
The accuracy evaluation is based on the Perfect 10 game.
How quickly can you answer 10 questions in a row correctly
without a mistake? The game takes a baseline test, then an
ongoing average is kept for each pupil. The percentage
improvement is based on the baseline test to ongoing average
score. This improvement is mapped against the number of
times pupils log in to the system.
Overall, the average pupil using Mental Maths has improved
their speed by 33.7% and accuracy by 35.9%. By the end
of March 2022, 2.29 million questions had been answered
by pupils.
Wildlife Conservation
ZSL London Zoo
Liontrust are proud sponsors of the global conservation charity
ZSL and their efforts to protect the Asiatic lion from extinction,
a partnership that stretches back nearly a decade.
Liontrust has helped recently to bring together a newly matched
pair of the big cats at ZSL London Zoo’s immersive Land of the
Lions exhibit. It is hoped that the pair will breed and boost the
numbers of the Critically Endangered species – of which just
600 remain in the wild.
The iconic big cats which once roamed across Asia – from
Turkey to Eastern India – are now found only in the Gir Forest
in Gujarat, India. Thanks to conservation efforts, Asiatic lions
were brought back from the brink of extinction and their
numbers have risen slightly in the last decade, but their future
is still precarious. Due to their limited range and reliance on
a single habitat, Asiatic lions are particularly susceptible to
disease outbreaks or natural disasters.
ZSL, through its science and conservation efforts in the field
and at ZSL London Zoo, is working to ensure a future for
Asiatic lions.
Five areas currently exist to protect the Asiatic lion in India:
the Gir Sanctuary, Gir National Park and Pania Sanctuary
form the Gir Conservation Area (GCA) covering an area of
20,000 km2 of forest representing the core habitat for the
Asiatic lion. The other two wildlife sanctuaries, Mitiyala and
Girnar, protect satellite areas within a lion’s range distance of
the Gir Conservation Area.
ZSL supports all efforts to protect Asiatic lions in the Gir
and works with the Wildlife Institute of India to assist with
conservation efforts – from sharing expertise to providing
training for wildlife vets.
ZSL London Zoo’s flagship exhibit Land of the Lions is
an immersive and engaging hub for ZSL’s Asiatic lion
conservation and education efforts, and an area sponsored
by Liontrust. Transporting visitors from the heart of London to
India’s vibrant Sasan Gir, people can get closer than ever
before to the lions, while embarking on an adventure through
the Indian-inspired experience. From exploring an Indian
barber shop, in the replica Sasan Gir high-street to a train-
station, the exhibit gives visitors a sense of just how close
lions and people live in India.
Land of the Lions is home to a pair of Asiatic lions, male
Bhanu and female Arya. Matched as part of the international
breeding programme for endangered species, co-ordinated
by EAZA’s (European Association of Zoos and Aquaria) big
cat specialists, the hope is that the two will breed in future.
Arya’s move from Paignton Zoo could not happen until the
three females that previously resided in London had moved to
a new home in Germany. Liontrust sponsored the moves of all
four lions, including the creation of custom-made crates so that
the precious cargo could travel in safety and utmost comfort.
The lions form a back-up population of the Critically
Endangered species in an environment in which people are
inspired to protect animals and where conservationists can
learn both from and about animals. These learnings are shared
with other zoos across the world and with conservationists in
the field, who use this critical information to carry out their
work in the wild.
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LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT Tusk Lion Trail
Liontrust is proud to have supported the Tusk Lion Trail 2021
by sponsoring the lion statue that lived outside the National
Gallery in Trafalgar Square. The event was part of a global
celebration of lions, the people who live alongside them and
the conservation work in Africa. Forty seven life-sized lion
sculptures, designed and made by artists, musicians and
sportspeople, were placed around the world, including in
London, as part of the Trail.
The Liontrust lion that lived in Trafalgar Square was painted by
the legendary comedian John Cleese and his wife Jen Wade.
The rainbow colours signify hope, dreams and magic. The fish
is the symbol of John Cleese’s wife.
The money raised from the sponsorship and selling the statues
through auction went to Tusk’s conservation and community
work across Africa.
Levelling up Goals
Liontrust has partnered with the Purpose Coalition on a
Levelling Up Impact report which will set out its contribution to
the levelling up agenda in the UK.
The Levelling Up Impact report will highlight the work
Liontrust is already undertaking to deliver a positive impact
on wider society, particularly through financial education and
sustainability within the framework of 14 Levelling Up Goals.
The Goals, established in 2021 by former Education
Secretary Rt Hon Justine Greening with input from businesses,
universities and policymakers, are designed to provide an
architecture that will help tackle the challenges the country
faces post Covid-19. They focus on key life stages – from early
years through to adulthood, alongside other barriers such as
fair career progression and closing the digital divide - and
highlight the main issues that need to be resolved to create a
level playing field for everyone.
The Goals are the first major piece of work by the Purpose
Coalition, which includes businesses, universities and public sector.
We are delighted to be supporting Levelling up Goals because
of the importance of providing opportunities to as many people
as possible wherever they grow up and live.
One of the best ways of achieving this is through education.
Helping children with numeracy and delivering financial
education is very important to Liontrust because these are
indispensable skills for everyday life. Research into financial
literacy has shown a large number of young people in the UK
do not feel confident about handling money.
A way of encouraging people to engage with their savings
to make them work more effectively is through sustainable
investment. Most people can relate to the importance and
benefit of sustainable investing for themselves and their world.
120k
A video we filmed with John
Cleese and Jen Wade about
animal conservation was
watched almost 120,000
times across social media
39
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT OPERATIONS REVIEW
We are focused on maintaining an operations team that is efficient, scalable and that gives us the ability to continue to support our
business model and strategic objectives for growth in future years; whilst also ensuing that they deliver value to all our stakeholders.
Our key operations teams (together, the “Operations Team”) are:
Operational Oversight team,
which is responsible for the
oversight of our custody, middle
office (transaction matching,
corporate action management,
derivatives management
and reconciliations), fund
accounting/valuation/pricing
service providers and our
transfer agency outsourced
providers.
Technology & Data
team, which focuses on
the development and
implementation of a cloud-
based server infrastructure,
IT support, delivery of IT
hardware upgrades and the
maintenance of a high-quality
technology environment that
supports the business.
The Operations Team have, in the last 12 months, achieved
the following:
• Due to the Covid-19 pandemic, continued successfully to
manage the IT support for all employees and members
in a “hybrid working from home” environment, including
providing continuous on-site support during normal working
hours at our London office. During this financial year ended
31 March 2022, we have made no Covid-19 related
redundancies, nor sought to take part in any government
assistance schemes.
• Worked with Alpha Financial Markets PLC, external
consultants, to produce the Operations & IT Due Diligence
Report on Majedie Asset Management Limited (“Majedie”)
prior to entering into the Sale & Purchase Agreement in
relation to the acquisition of Majedie.
• Successfully integrated the internal operational and technology
aspects of the Global Fundamental team following the
acquisition Majedie, which was announced on 7 December
2021 and completed on 1 April 2022. This included
onboarding all the Majedie staff and migrating all required
data onto Liontrust systems.
• Moved offices in Edinburgh and Luxembourg to improve the
working environment.
• Transitioned from Skype to Teams for telephony and also
enhanced our video conferencing capabilities across all
offices for both internal and external meetings.
Property & Facilities team,
which is responsible for
managing our offices in
London (2 Savoy Court,
10 Old Bailey), Edinburgh
(24/25 Charlotte Square)
and Luxembourg (18 Val
Sainte Croix).
Product team, which is
responsible for product
development, product strategy
and product governance
including the management
of our Assessment of Value
Report process.
• Implemented a market-leading corporate engagement tool.
• Continued to remain vigilant on Cyber threats and Disaster
Recovery projects, including conducting successful data
centre failover tests.
• Successfully transferred the administration for the Liontrust
Asia Income Fund to Maitland.
• Managed the mergers of the Liontrust European
Opportunities Funds into the Liontrust European
Growth Fund, the Liontrust Global Income
Fund and the Liontrust US Income Fund into
the Liontrust Global Dividend Fund, and the
Liontrust Japan Opportunities Fund into Liontrust
Japan Equity Fund.
• Implementation of a cash sweep facility for our
Unit Trust and OEIC range of funds,
• Developed and managed the launch of the GF
Sustainable Future Multi-Asset Global Fund in October
2021.
• Managed the implementation of the fixed Administration
Fee for the Multi-Asset range of funds in July 2021.
• Managed the Assessment of Value process, culminating in
the publication of the second full report in December 2021.
40
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT 41
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT PRINCIPAL RISKS AND MITIGATIONS
The Group takes a cautious and pro-active approach to risk
management, recognising the importance of understanding
risks to the business, setting and monitoring risk appetite and
implementing the systems and controls required to mitigate them.
Liontrust has defined a Risk Universe and uses a Risk Appetite
Statement as well as a number of risk frameworks. These
capture the core risks inherent in our business and assess how
they are managed and mitigated, identifying the key indicators
that would suggest if the risk is likely to materialise together
with an assessment of the cost impact that each risk may have
on our regulatory capital.
The Risk Management Department (RMD) is a business
function set up to manage the risk management process on
day-to-day basis. The RMD is responsible for the Group’s
Risk Management Framework. The risk management process
is integrated into the Group’s internal control system and is
an essential part of corporate governance and management
arrangements. It provides an objective review and assessment
of the risks Liontrust faces in seeking to achieve its objectives.
Liontrust’s Risk Charter defines the mission, scope of work,
organization, accountability, authority and responsibilities of
the RMD of the Group. It governs how the Chief Risk Officer
and other staff in the department discharge their duties and
conduct risk management activities within the overall Risk
Management Framework of the Group.
Our Professional Indemnity Insurance covers us for losses,
errors, and fraud. Our current assessment of our key
operational risks and risk management framework suggest
that we are not at material risk of breaching our insurance
limits, although all our risk appetite and prudential planning
incorporates the scenario of a failure of insurance cover.
Risk Culture Statement
Our risk culture aligns with Liontrust’s vision of having positive
outcomes for our investors, stakeholders, and society. This
statement is a guide for employees and describes the key
elements which make up the Liontrust Risk Culture.
Our Values and Risk Culture
COURAGE
• We are encouraged to “speak up” about any risks or
incidents we are concerned about and deal with issues
before they become major problems.
• We understand that risk management is not about zero risk,
but about taking balanced commercial decisions to achieve
Liontrust’s goals.
• We understand mistakes are inevitable and have the courage
to own up to them.
• We understand that efficiently learning from mistakes and
sharing our good practises is critical to our success.
• Potential incidents and near misses are treated seriously and
seen as valuable learning opportunities.
SUSTAINABILITY
• We consider sustainability risk as part of our day to day risk
management.
• Good conduct and culture - “doing the right thing” reduces
reputational risk and helps to build a long term sustainable
business.
• We believe a diverse and inclusive workforce reduces
groupthink and promotes innovation and sustainable growth
through independent thinking and new ideas.
• We believe that encouraging good governance and
stewardship of the companies in which we invest reduces
investment risk and is an essential part of creating shareholder
value and delivering investment performance for our clients.
EXCELLENCE
• We take personal responsibility for having the due skill and
knowledge to do our jobs well.
• We recognise positive risk culture as a key element of
successful performance management.
• We aim to correct the root cause of incidents, rather than
implement temporary workarounds.
• We avoid excess complexity, appreciating that simple
solutions are better and more effective.
• We are trusted and empowered to make decisions given we
follow transparent, systematic, and thorough processes.
RESPONSIBILITY
• We are encouraged to follow the spirit of the rules, not just
the words.
• Senior management lead by example, demonstrating high
integrity in and outside the workplace.
• We are encouraged to be transparent and open to provide
our customers with information in a way that helps them make
the right decision.
• We own our risks and firmly understand how the risks we
manage can impact Liontrust.
• We uphold the highest standards of integrity in all of our
actions, treating staff, clients and stakeholders fairly and
with respect. We do not turn a blind eye to inappropriate
behaviour.
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LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT
Enterprise Risk Management Framework
In order to ensure that the Group regularly reviews and
monitors all the potential areas of risk to the business, including
emerging risks, Liontrust has implemented an Enterprise Risk
Management (ERM) framework which allows management,
the Audit & Risk Committee and the Board to be kept fully
informed of potential risks to the business and also how these
risks would impact the group’s capital adequacy.
The diagram below summarises the key elements of the
Group’s ERM Framework which is based around these risk
areas to ensure a consistent approach across the framework.
There are three main elements to capturing and reviewing
risk within the Group; the Risk Appetite Statement (“RAS”), the
Internal Capital Adequacy Assessment Process (“ICAAP”) and
the regular risk reporting. The ICAAP will be superseded by
the Internal Capital Adequacy and Risk Assessment (“ICARA”)
from 2022.
• The RAS identifies key risks, their materiality and their likelihood
of occurrence and sets the amount of risk we want to take or
are willing to accept to achieve our business objectives.
• The ICAAP combines the RAS and the Group’s financials
together with scenario analysis and stress testing to
determine how the realisation of risks might impact on the
Group’s capital and regulatory requirements.
• The Enterprise Risk Report brings together the ongoing risk
identification, management, monitoring and risk reporting
across the risk universe to ensure the changing risk
environment and the Group’s risk profile versus the RAS is
communicated effectively to the Board.
The risk and uncertainties that affect the Group’s business
can also be broken down into risks that are within the
management’s influence and risks that are outside it. Risks
that are within management’s influence include areas such
as the expansion of the business, prolonged periods of
underperformance, loss of key personnel, human error, poor
communication and service leading to reputation damage
and fraud. Risks outside the management’s influence include
pandemics, regulatory change, climate change, falling
markets, terrorism, a deteriorating UK economy, investment
industry price competition and hostile takeovers.
Liontrust Board
Audit & Risk Committee
Risk Appetite Statement
ICAAP
Enterprise Risk Report
Credit Risk Report
Operational Risk Report
Portfolio Risk Report
Other risk summary
43
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT Risk Management Process and Internal controls
The broad process for managing risk in the framework essentially follows these steps:
Define Risk
Universe
Agree Risk
Appetite
Manage
the Risk
Monitor
the Risk
Risk Universe
The Group has identified 8 Risk Areas across the business activities and functions of the Group and uses these Risk Areas to define,
measure and mitigate risk in the business. This forms our risk universe:
Risk
Credit risk
Description
Credit risk covers the risk of loss due to a debtor’s inability to pay. The Liontrust Group maintains a liquidity policy
document which identifies the credit risks that may affect any area of the business and details how these risks are
monitored and controlled.
Market risk
Operational risk
These risks include:
• failure of banks / significant counterparties;
• failure of a client to pay fees;
• failure of a client to pay funds for an investment; and
• failure of a fund to pay redemption monies.
Market risk is the risk that the value of assets will decrease due to the change in value of the market risk factors.
Common market risk factors include asset prices, interest rates, foreign exchange rates, and commodity prices.
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems, or from
external events. The management of operational risk is formalised in a number of ways including risk assessments and
scorecards, documented procedures and compliance manuals, a comprehensive compliance monitoring programme
(both internal and external), issue tracking and a regular assessment of third party providers. Liontrust manages its
operational risk with a framework based upon the Basel Committee on Banking Supervision’s paper “Sound Practices
for the Management and Supervision of Operational Risk” using seven operational risk event types that may result in
substantial losses including:
Event Type
Description/Examples
Internal Fraud
Misappropriation of assets, tax evasion, intentional mismarking of positions, bribery
External Fraud
Theft of information, hacking damage, third-party theft and forgery
Employment Practices
Discrimination, workers’ compensation, employee and Workplace health and safety
Clients, Products, &
Business practice
Market manipulation, antitrust, improper trade, product defects, fiduciary breaches, account
churning
Damage to Physical
Assets
Natural disasters, terrorism, vandalism
Business Disruption &
System failures
Utility disruptions, software failures, hardware failures, disruption due to external events such
as war or pandemic and IT security & cyber,
Execution, Delivery &
Process Management
Data entry errors, accounting errors, failed mandatory reporting, negligent loss of client
assets
Business risk
The potential strategic, business, operational and legal risks arising from poor strategy, competitive pressure, poor due
diligence, poor integration of acquisition targets and badly managed divestitures.
Client Management
The risks associated with poor distribution and poor client service including a failure to meet business objectives and
suitability / mis-selling.
Portfolio Management,
Investment and Liquidity
risk
People / Talent
Management
Regulatory, Compliance,
Conduct and Financial
Crime
The risks arising from poor investment returns, incorrect levels of investment risk or liquidity issues in the funds.
The risk of losing experienced and talented staff or a failure to develop staff.
The risk of legal penalties, financial forfeiture and material loss if Liontrust fails to act in accordance with industry laws
and regulations.
44
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT Risk Appetite
Liontrust has documented a Risk Appetite Statement for each of
the Risk Areas. They identify the Key Risks facing the Group,
the Risk Appetite and detail a combination of qualitative and
quantitative measures as appropriate to adequately cover the
identified risks. This includes identifying measures that are not
only financially focused, but also measures that align to customer
outcomes, reputation and operational risks.
The risk appetite approach is consistent across the Group. The
risks of each business entity reflects the strategic direction as
set by the Group for their risk appetite in the financial year
ahead, and gives due consideration to the broad range of
internal and external risk factors from the risk universe that
impact them. Our overarching financial risk appetite is to have
operational risks cost less than one percent of annual adjusted
profits. This risk appetite guides our insurance excess and the
amount of operational risk we tolerate.
Managing Risk
The internal control system is designed to manage, rather than
eliminate, the risk of failure to achieve business objectives. The
Group’s internal control system is based on a “three lines of
defence” model summarised in the diagram below:
Liontrust Asset Management Plc Board
LLP Management Committees
Audit & Risk Committee
Business Departments
Control Departments
Other Assurance Providers
Front Office
Risk
Internal Audit
Operations
Compliance
External Audit
Sales & Marketing
Finance (Controls)
AAF Assurance Process
Finance (Treasury)
IT Security
Consultancy Reviews
1st line of Defence
2nd line of Defence
3rd line of Defence
45
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT Liontrust’s Business Departments, supervised by the Partnership
Committees, are responsible for identifying and managing risk
and control activities within their business lines. This is the first line
of defence. The Control Departments, supervised by the Audit &
Risk Committee develop and implement risk frameworks to support
the front line and objectively challenge the identification of risk
and the design of the controls within the business as a whole.
The third line is a review of the risk and control activities in the
Group by parties independent from the design, implementation
and execution to highlight weaknesses, and provide assurance
on the effectiveness and suitability of the internal controls.
Risk Registers and RCSAs
As part of the implementation of the ERM framework, the
Group’s risk registers have been refreshed with a view of
enhanced comprehensiveness and consistency. Departments
completed Risk and Control Self Assessments (RCSAs) in which
they detail in the register what risks they own or face, describe
the mitigating controls in place and rate the risks in terms of
inherent (pre-control) risk and residual (post-control) risk. The
resulting risk registers provide a Group-wide bottom-up view of
the risks faced by Liontrust. The ERM framework defines a risk
definition matrix which enables risks across all departments to
be compared in terms of likelihood and impact.
Risk Monitoring
The Group uses a Risk Scorecard system to track Risk Indicators
for measuring levels of risk or to determine levels of Risk Appetite
or Risk Capacity in each of the Risk Areas. Each Key Risk has
one or more risk indicators associated with it. The Risk Indicators
are the key mechanism for tracking of Risk Appetite performance
throughout the financial year from a top-down view. They
highlight when the Group is approaching the pre-defined
appetite levels and highlight when action should be considered.
The risk registers form a prospective and complementary monitor
of risk and are categorised using the Group-wide Risk Areas.
The individual risk scores and risk ratings are aggregated into
Key Risks and then Risk Areas to produce a Risk Area scorecard
and heat map respectively. This forms the Group’s Risk Profile
and is designed to allow the Board and senior management
to quickly identify areas of concern and compliance with the
Group’s risk appetite.
Risk Profile
Each risk register leveraged off previous risk registers, various
audits and industry sources to identify their risks. The risks
were identified, assessed, and categorised into the standard
Liontrust risk area taxonomy – with operational risk categories
escalated one level. The following heat maps on page 47
illustrate the highest risk rating within each risk area on the
following basis:
• inherent risk rating (pre-control - assuming the listed controls
were not in place) and
• residual risk rating 2022 (post-control – rating given the
current effectiveness of controls)
The inherent vs residual heat maps show a general down and
left movement which shows the effectiveness of the mitigating
controls on our risks.
Additionally, the red line represents our risk appetite and the
shaded area represents areas beyond our risk appetite. On an
inherent basis, there are several risks which sit beyond our risk
appetite, however on residual basis, they are mitigated down
to manageable levels.
There are some risks that cut across the risk universe and so
are analysed separately such as sustainability risk, conduct risk
and reputational risk. Our approach is to individually tag each
of the identified risks in the register if they are also one of these
risk groupings and then analyse them separately.
46
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT Risk Profile Charts
Inherent risk:
Impact
Catastrophic
÷
Extreme
1
3
13
10
5
9
12
14
8
4
11
6
7
2
High
Medium
Low
Very low
Residual risk:
Impact
Catastrophic
Extreme
1
High
Medium
Low
Very low
÷
14
3
4
12
13
5
11
10
9
8
6
7
2
Rare
Very low
Low
Medium
High
Rare
Very low
Low
Medium
High
Likelihood
Likelihood
Risk Areas
1. Credit Risk
2. Market Risk
8. Operational risk – Business Disruption & Systems
Failures
9. Operational risk – Execution, Delivery & Process
3. Operational risk – Internal Fraud
4. Operational risk – External Fraud
5. Operational risk – Employment Practices and
Management
10. Business risk
11. Client management
Workplace Safety
12. Portfolio Management, Investment risk and Liquidity
6. Operational risk – Clients, Products & Business Practice
13. People / Talent management
7. Operational risk - Damage to Physical Assets
14. Regulatory, Compliance, Conduct and Financial Crime
PRINCIPAL RISKS
Operational risk
The key operational risks that have been identified as potentially
having a significant impact on our business or capital are as
follows:
• Trading errors
• Breach of mandate restrictions
• Corporate action errors
• Failure of key supplier or system
• Suitability risk
• Integration risk
Liontrust has worked on integrating the Architas and Majedie
businesses over the last twelve months with most activities now
fully transferred. The remaining work relates to the change
of Authorised Corporate Director and transfer agency for the
Majedie funds. There has been a higher risk of operational
failures over this period due to the change of systems, controls
and procedures as well as changing staff responsibilities.
The Group made a significant investment in project oversight
and appropriate resourcing, which has mitigated the risks
and Liontrust has devoted considerable management time to
minimise operational risk arising from the integration.
Cybersecurity and information technology risk
Liontrust is dependent on our IT infrastructure and systems. A
successful cyber-attack could result in the loss of data; disrupt
our ability to service our customers or in a worst-case scenario –
a loss of clients’ assets. Liontrust has included the management
of cyber security into our governance framework for a number
of years and have appointed a virtual Chief Information Security
Officer to ensure we have the right infrastructure and defences in
place. Liontrust also use specialist external consultants to review
and test our IT infrastructure and security including penetration
testing. All significant contracts, or those with sensitive data are
subject to cybersecurity clearance.
Remote working brings additional challenges and vectors for
cyber risk: a reliance on individual’s internet connectivity, more
digital controls, changes in sales techniques, more digital
marketing, video client meetings and webinars. There are
47
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT 48
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT also the medium-term challenges of working digitally including
reinforcing our culture remotely, developing and delivering
online projects and improving productivity, recruiting talent
and managing successful teams outside of the office.
Staff awareness and training is an important part of our defence
against attack. Liontrust demands the same commitment to
tackling cybersecurity from its key outsourced providers.
Outsourcing Risk
As we outsource many of our labour intensive operational
functions, we commit high levels of resource to the management
of these third party providers. We work hard to ensure that the
relationship is a collaborative one and that both parties are
working together towards the same goals, via a dedicated
relationship management team and through a comprehensive
monitoring programme. Failure of any outsource provider
presents a real threat to the business and our continuity
planning incorporates a stepped approach to manage and
control these risks.
Sustainability Risk
Liontrust may be negatively impacted by an ESG event or
issue.
There are multiple impacts of ESG or climate on companies.
Liontrust may be impacted directly, via our outsource partners
or through our investments in companies on our clients’ behalf.
The impacts may come from physical risks (extreme weather
events, or supply shortages) or from exposure to transition
risks which arise from society’s response to climate change
(technological change, social upheaval or regulation). These
can change business costs, alter the viability of products or
services, or alter asset values. There are also legal costs and
potential liabilities for climate-related actions.
This year we have worked on modelling these potential impacts
into our prudential capital planning. Further information on our
efforts to manage this risk and integrate sustainability throughout
our business is in the section “Our People, Sustainability and
Corporate Responsibilities” on page 52.
Liontrust has successfully grown our client base over the last
few years and this has reduced the impact of a single client
redeeming. Clients are also able to withdraw their assets at
short notice. The retail funds have daily liquidity and most
institutional mandates have no lock in periods or liquidity
constraints. This may mean that in times of crisis assets
under management may fall rapidly increasing the potential
volatility of earnings. This is mitigated partly by the Group’s
variable cost base.
Competitive Environment
Liontrust operates within a highly competitive environment
with both local and global businesses, many of which have
greater scale and resources. The changes to the regulatory
and business landscape have resulted in a greater focus
on fees & charges, a growing importance of brand &
marketing and distributor relationships. Initiatives such as the
Assessment of Value promote transparency and enable clients
to better compare funds. Failure to compete effectively in
this environment may result in loss of existing clients and a
reduced opportunity to capture new business which may have
a material adverse impact on the Group’s financial wellbeing
and growth. Our governance and leadership help to ensure
that the Group remains competitive and does not lose focus.
Russia / Ukraine
Russia invaded Ukraine on 24 February after several months
of escalating tensions. Liontrust had flagged the risks stemming
from the crisis, particularly in relation to the Russia Fund. Our
Portfolio and Risk Committee increased the monitoring of the
relevant risks, emphasising the importance of maintaining
sufficient liquidity in the Russia Fund to deploy assets efficiently
into the market and to service client needs. The invasion of
Ukraine triggered sanctions on Russia and retaliatory actions
against foreign investors in Russia and this has caused
significant volatility in certain financial and commodities
markets worldwide and restricted the ability to trade and value
assets relating to Russian companies. The Russia Fund was
suspended as a result of these effects and we are working with
our partners and stakeholders to resume trading in the Fund as
soon as sanctions and market conditions permit.
Client Concentration and the risk of redemptions at short notice
Liontrust has several large, key clients and relationships.
Should a large client leave (or conversely a new large client
be acquired) there is a risk that earnings may be impacted.
We have no sanctioned individuals investing in our funds.
Economic sanctions and the repercussions from the conflict will
likely impact companies globally across a variety of sectors,
including energy, financial services and defence, among others.
49
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT Consequently, the performance of all funds, not just the Russia
Fund, may also be impacted negatively, even if they have
no direct exposure to the regions involved in the conflict. The
conflict has also resulted in significantly higher risks of cyber
attacks, which are being monitored. We continue to consider
the impact of these scenarios and any other emerging risks in our
business decisions as well as in our capital planning. Liontrust is
well capitalised and positioned to weather these changes and
take advantage of the opportunities arising. All investment teams
consider the investment risks and opportunities that arise as a
result of long-term trends in respect to their portfolios.
People
People are a key part of our business and the stability of our
investment and operational expertise is critical to our success.
The Group takes appropriate steps to manage expectations
and minimise the loss of good quality staff. Any departure
of significant personnel may result in a loss of funds under
management, especially the loss of one of our fund management
teams. Liontrust believes building and maintaining our distinct
culture as well as providing a good working environment is
key to the future success of our business and the engagement
and retention of its staff, therefore, we invest significantly in our
people, including through training and qualifications.
INTERNAL CONTROLS
Summary of Controls
The main elements of the Internal Controls which have operated
throughout the year are as follows:
• a clear division of responsibilities and lines of accountability,
allowing adequate supervision of staff;
• detailed procedures and controls for each department;
• the development and implementation of specific accounting
policies;
• preparation of annual plans and performance targets in light
of the overall Group objectives;
• an operational risk scorecard measuring risk levels across
the Group;
• reports from the Executive Directors to the Board on the
actual performance against plans;
• reports from the Chief Risk Officer highlighting the Principal
risks faced by the Group detailing the exposures, controls
and mitigations in place;
• reports from the Chief Compliance Officer detailing the
robustness of procedures and controls for each department;
• reports from the Head of Finance on controls and risks
concerning client money and assets;
• reports from the Money Laundering Reporting Officer
(MLRO) detailing the arrangements in place for anti-money
laundering and financial crime prevention;
• reports from the virtual Chief Information Security Officer
(vCISO) on cybersecurity and data protection measures;
• reports from Internal Audit on the effectiveness of the Group’s
systems and controls to the Board;
• reports to the Board in respect of the management of, and
results of visits to, third parties to whom functions have been
outsourced;
• compliance by all members of staff with the Group’s policies
and statement of business conduct, which seeks to ensure
business is conducted in accordance with the highest
standards; and
• weaknesses and confirmation that necessary action is taken
to remedy the failings, particularly those categorised as
‘significant’.
Effectiveness of Risk Management and Internal Controls
The Board has reviewed the effectiveness of the Group’s system
of internal controls for the financial year and up to the date of
this Annual Report and Financial Statements. The Board has
carried out a robust assessment of the emerging and principal
risks affecting the business, including a description of the
principal risks as noted above, and has a process in place
within the business to identify, manage and mitigate key and
emerging risks on an ongoing basis, also as detailed above,
in accordance with the guidance from the Financial Reporting
Council’s Guidance on risk management, internal control and
related financial and business reporting (‘GRM’).
The Board is of the view that all necessary actions have been,
or are being, taken to address matters identified as part of
the ongoing risk management process and that no significant
weaknesses were identified during the year.
Assurance process
The senior management arrangements, systems and controls
environment in place across the Group are reviewed by the
Board and Audit & Risk Committee each year. The Group
50
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT
appoints an internal audit function to monitor the appropriateness
and effectiveness of its systems and controls. The Audit & Risk
Committee and the Internal Auditors have agreed a rolling three
year Internal Audit plan. This includes the following Audit areas:
front office controls; data protection, security and governance;
risk management; significant financial systems; outsourcing
arrangements and CASS.
On an annual basis, Liontrust commissions an external accountancy
firm, to perform testing of integrity of aspects of the Group-
wide control environment. Liontrust has adopted the principles
established in the “Assurance Reports on internal controls of service
organisations made available to third parties” as recommended by
the Institute of Chartered Accountants of England and Wales in the
March 2011 technical release of AAF 01/06. RSM UK Group LLP
was appointed to test the controls and to produce the AAF report.
The results of this testing, including any exceptions identified, are
made available to senior management, the Board, the Audit & Risk
Committee and our institutional clients.
STAKEHOLDERS
The Group has a significant number of stakeholders whose
futures are linked to the success of our business.
These significant stakeholders are:
• shareholders;
• clients;
• members & employees;
• service providers including those that provide the Group
with outsourced functions;
• regulators & industry bodies; and
• wider society.
Each of these groups presents different opportunities and
uncertainties and the Group ensures that there is regular
contact and monitoring of the various bodies. They are all
integral to the future success of the business, detailed below
is a summary of why they are important and how we engage
with them:
• We aim to provide our shareholders with sustainable
growth and increasing returns. We regularly engage with
our shareholders to support the long-term objectives of our
business.
• Clients are core to the success of our business. We strive
to provide long term performance and meet the needs
and expectations of our clients. Treating customers fairly,
providing good service and good value is central to how
we conduct business across the Group and we continually
strive to improve our offering and service.
• Liontrust is proud of our people and our culture and
they help us to deliver our vision and obligations to our
stakeholders. We continue to invest in our staff to attract,
retain, incentivise, develop and encourage the individuals
in our company to meet and surpass our current and future
objectives.
• Outsourcing is an integral part of the Liontrust operating
model. Liontrust outsources in two key areas, Transfer
Agency and Fund Accounting & Fund Valuation Services
across two main jurisdictions. Regular meetings and
reviews helps to ensure that the relationship continually
improves.
• Liontrust acknowledges the importance of working closely
and constructively with our regulators and our industry
bodies to ensure we run our business in a compliant way
and help to improve the wider financial environment for
clients in the longer term.
• Liontrust also recognises the wider responsibility we have
to society and the importance of doing the right thing.
We continue to invest and improve our governance and
corporate responsibility including via our community
engagement programme to show the positive impact our
investment management and corporate activities can have
on our clients and wider society.
Three of the investment teams – Sustainable Investment, Multi-Asset and Global Equity
– winning awards while the other teams – Cashflow Solution, Economic Advantage
and Global Fixed Income – have all received nominations for fund awards.
51
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT OUR PEOPLE, SUSTAINABILITY AND
CORPORATE RESPONSIBILITIES
Liontrust is committed to building a sustainable business and
intends that our principles are embedded into our policies
and practices, to the benefit of stakeholders as well as the
wider community.
OUR PEOPLE
Liontrust’s key assets are our people. We are proud of
everyone who works at Liontrust and we invest in their training,
qualifications and development as part of our strategy to retain
talented fund managers and staff.
Everyone at Liontrust is personally accountable for their
commitments, and actions and for, delivering on our promises.
We are responsible for supporting each other, collaborating
and being open to challenge and debate. All staff have
a responsibility to act in the best interests of investors,
shareholders and other stakeholders. We seek to uphold the
highest standards of integrity in all of our actions.
We treat all our staff with respect. We are committed to the
development of our people and encourage everyone to fulfil
their talent and potential. Liontrust recognises the importance
of an appropriate work-life balance, both for the health and
welfare of employees and for the business.
Everyone is encouraged to make decisions. Not every
decision will be right, and we have to be confident enough
to recognise when they are wrong and change them. Many
businesses fail because people don’t make decisions.
Employee Engagement
Liontrust have a highly engaged, experienced and stable workforce, with 50.5% of employees having been with the firm for five years
or more. Overall turnover in 2022 was 10.9% (2021: 7%). We focus on keeping our most talented employees, and our retention of
high-performing employees remains strong at 99% (2021: 100%).
50.5%
of employees having been with the
firm for five years or more
Overall turnover in 2022 was
10.9%
Our retention of
high-performing employees
99%
AVERAGE YEARS’ SERVICE
Less than 1 year
1–5 years
6–10 years
11–15 years
16–20 years
21–25 years
Over 26 years
14%
38%
28%
9%
7%
3%
1%
52
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT Liontrust encourages open communication and an inclusive
culture. Liontrust’s Executive team hold regular town hall style
meetings to provide employees with company updates and
to explain and discuss corporate strategies. The Chair and
the Non-executive Directors are active in these meetings.
The members of our Management Committee have an open-
door policy. We also encourage feedback from employees
to senior management through more formal forums, including
regular team meetings and off-sites to discuss our strategy, as
well as through the annual performance appraisal process.
Managers throughout Liontrust have a continuing responsibility
to keep their teams informed of developments and progress.
Workforce Advisory Committee
Liontrust’s Workforce Advisory Committee has representatives
from across the business, including a Non-executive director
and one member of the Management Committee. The purpose
of this Committee is to advise the Management Committee
and the Board on issues relating to the workforce, ensuring
all colleagues have the skills, motivation and opportunity to
develop and grow. The Committee meets regularly during
the year and has been instrumental in further developing the
workforce engagement survey.
Workforce engagement survey
In December 2021, we undertook our most recent workforce engagement survey. The overall response rate was 79%, versus an
industry average of the mid 60s%. Our engagement index was 74%, sitting 4% above the norm (Liontrust has been compared
with a general normative database of survey responses from over 150 organisations across a variety of sectors. All surveys
have been conducted within the last three years.
The survey was benchmarked against five pillars of engagement: Engaging Managers; Employee Voice; Realising Potential;
Organisational Integrity and Compelling Leadership – we scored above the norm for every pillar.
Following the inaugural survey we were unable to execute our plans to cascade the results due to the pandemic however, following
the 2021 survey all staff have had an opportunity to review and discuss the results at a departmental result sharing meeting and
contribute to an overall departmental action plan. These discussions will form part of an overarching company action plan.
79%
73%
72%
75%
83%
87%
76%
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Day to day
working life
Learning and
development
Teamwork
Leadership and
communication
Line manager
Our values
Views on Liontrust
overall
Norm
We believe that the impact of recent business acquisitions, combined with prolonged working from home during the coronavirus
pandemic have impacted on scores across these areas. Nonetheless, useful lessons have been learned and an action plan to
address key elements of the feedback is underway.
53
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT Equal Opportunities, Diversity and Inclusion
Liontrust believes that its people should be appointed to their
roles based on skills, merit and performance and makes all
appointments within the guidelines of its equal opportunities
policy. We are committed to greater diversity, including gender
and ethnicity, and the benefits that this will bring to the business.
We are an equal opportunities employer and it is our policy to
ensure that all job applicants and employees are treated fairly
and on merit regardless of their race, gender, marital status,
age, disability, religious belief or sexual orientation. During the
year, we reviewed and updated our diversity policy; Senior
Management and the Board continue to believe that greater
diversity will enhance the performance of the business.
Diversity and Inclusion Committee
During 2021, we established the Diversity and Inclusion
Committee (D&I Committee) chaired by our COO/CFO which
provides feedback and recommendations to the Management
Committees, Nomination Committee and the Board. The
purpose of the Committee is to address the challenges and
opportunities arising from the following topics:
• Preventing and eliminating discrimination,
including
unconscious bias.
• Raising awareness of the importance and benefits of diversity
enhancing our culture and innovation.
• Ensuring policies and procedures promote diversity across
the company.
• Increasing awareness through training, mentoring and
coaching.
• Highlighting changes required to promote diversity.
• Attracting people from diverse backgrounds to join Liontrust
and the asset management industry in general.
The Committee meets regularly to make progress across this
important area. During the year the committee partnered with
PDT Global to deliver the first Liontrust diversity audit. The
recommendations and conclusions from this audit will assist
the Committee in developing its strategy.
The Committee hosted a panel discussion and networking
event for International Women’s Day, ran a stress awareness
campaign to support staff during Stress Awareness Month in
April and worked on enhancing parental leave policies.
The Board regularly reviews the gender split across the Group
and has asked management to address the issue of under
representation of women in senior management. Liontrust has
improved the diversity of the Board over the last few years
currently with 37.5% female representation. The Board will
continue to work to ensure the composition of the Board and
the workforce as a whole is representative of wider society.
As part of the Executive Directors’ strategic objectives, there
is a commitment to gender-balanced shortlists of candidates
at the beginning of a recruitment process.
is broadly 64:36
Liontrust’s current gender balance
male:female with men predominating in more senior positions.
This reflects the history of the asset management industry and
is typical of the financial industry as a whole. The Board
and senior management are actively seeking to address this,
and we have seen a 2% increase in female employees in
the past year. Senior management have been working to
implement our aspirations and putting in place the strategies;
the policy changes; and the culture changes that are required
to address the gender balance and gap at Liontrust.
As at the 31st March 2022, Liontrust’s total of 200
employees/ partners was broken down as follows:
2022
Employees
Members of LLPs
Male
105
24
Female
67
4
We ensure there is a good gender mix of candidates in all
recruitment, removing all-male recruitment processes, providing
training to staff on diversity, reviewing our policies to remove
unconscious bias and encourage diversity and offering flexible
maternity, paternity and shared parental leave and flexible
working policies to help support staff.
Liontrust tracks and analyses our gender pay gap (the
percentage male employees overall are paid more than
female employees), and it is more than the average for the
financial services sector. Although the gender pay and bonus
gaps between female and male employees could be expected
to decline gradually as we continue to recruit and develop
senior female talent across the business both the Board and
senior management are seeking to transition the business more
quickly.
The McGregor-Smith review on ‘Race in the Workplace’,
noted that in 2016, 14% of the working age population are
from a BAME background, with this expected to increase to
21% by 2051. BAME individuals made up only 10% of the
UK workforce and held only 6% of top management positions
in the UK. During the year Liontrust asked staff to voluntarily
disclose their ethnicity. Of the 85% of staff who opted to
provide this data, 21.5% categorised themselves as non-white.
We recognise this is not a complete reflection of the ethnic
composition of our workforce as 15% of our staff have yet to
provide data on their ethnicity. We will continue to encourage
our staff to voluntarily disclose this information as we believe
it is important to measure the effectiveness of our initiatives to
allow us to make further progress where necessary.
The Parker Review sets out achievable objectives and timescales
to encourage greater diversity and provides practical tools to
support Board members of UK companies to address the issue.
The Review recommends that an increase the ethnic diversity
of UK Boards by proposing each FTSE 100 Board to have
at least one director from an ethnic minority background by
2021 and for each FTSE 250 Board to do the same by 2024.
Liontrust already meets this recommendation.
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LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT 37.5%
Liontrust has improved
the diversity of the Board
over the last few years
currently with 37.5% female
representation.
55
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT Investment 20/20 Internship Programme
Liontrust first partnered with the Investment Association in
2019 for its Investment 20/20 Internship programme, which
introduces young people to the asset management industry
on a fixed term contract basis. The initiative helps interns to
gain industry knowledge and experience and to develop
relationships, enabling them to progress in their careers and
providing them with skills to secure a permanent role.
As part of the Investment 20/20 programme, trainees have
opportunities to meet and network with over 200 of their peers
across the industry and participate in social and insight events.
Investment 20/20 also provides training on technical and soft
skills.
Liontrust welcomed four graduate trainees onto our Graduate
Programme which began in September 2021. With two
placements in London and two in Edinburgh, our trainees
receive hands-on support and training. They have established
themselves well in their roles and are actively supporting
and contributing to the performance of the teams. Liontrust is
committed to supporting our graduates with both IMC and CFA
study qualifications as well as offering a range of personal
and professional training opportunities during the placements.
Mentoring and Coaching Programme
Liontrust has offered coaching to its staff for a number of years.
Liontrust’s intentions to form a new Coaching and Mentoring
Programme have been temporarily put on hold due to the
Covid-19 pandemic. When the programme recommences it
will focus on helping managers and staff to enhance skills,
attitudes and behaviours that support their ongoing growth
and development as well as the overall performance of the
business.
In addition to our new learning management system which
enhances our internal training, we also encourage all our staff
to acquire business relevant qualifications and offer support
packages to enable them to do so.
Our investment professionals are required to achieve standards
above the regulatory minimum with a particular focus on the
CFA’s Investment Management Certificate (IMC) qualification
for investment staff.
Remuneration
We maintain a remuneration approach that promotes a
strong customer-centric culture, as well as risk awareness and
performance with a good alignment of staff, investor and
shareholder interests.
Our benefits package provides a generous array of financial,
health and well-being, lifestyle and family-friendly options for
employees:
• We encourage a good work-life balance with generous
annual leave and offer benefits including cycle to work, gym
membership subsidy and season ticket loans.
• Private medical insurance, comprehensive health checks,
eye care, an employee assistance programme with access
to confidential counselling support, and a further range of
health and well-being options.
• Employer pension contributions to a defined contribution
pension scheme.
• Life assurance policy and income protection scheme from
the first day of employment, providing financial security and
protection for when it really matters.
All-employee Tax Efficient Share Schemes
Our SIP (Share Incentive Plan) offers the opportunity for
employees to purchase Liontrust shares tax free. To further
enhance this, for every share an employee purchases,
Liontrust purchases two shares on their behalf. This benefit is
offered within the maximum limits as set by HMRC, allowing
employees to ‘buy into’ the success of the company in a tax
efficient way and is available to all employees who have at
least three months service. As of 31 March 2022, 83% of
employees opted to participate in the SIP.
Work-life balance, health and well-being
Liontrust recognises the importance of an appropriate work-life
balance, both to the health and welfare of employees and
to the business. Physical and mental wellbeing are important
to Liontrust. Offering private health care that includes mental
health support, physical health assessments and access to
an employee assistance programme that provides a 24/7
counselling service, supports employees.
Liontrust also
encouraged staff to take breaks from work during the lockdown
by providing additional holiday allowances over the period
and allowing staff to carry additional unused vacation days
over at year end.
Liontrust is actively developing a wellbeing and mental health
strategy, supported by the Workforce Advisory Committee and
the D&I Committee.
Liontrust offers informal flexible working arrangements of a 4:1
split between the office and home. All staff have the option to
make use of the informal flexible work arrangements, where
their role allows for this.
Liontrust continues to offer additional ad hoc flexible working over
and above the informal flexible working policy where necessary.
Living Wage
Liontrust is committed to offering fair pay to all by paying
staff at least the London Real Living Wage. This means that
every member of staff based in London, including contracted
maintenance and reception teams, earns at least a “living
wage” which is an hourly rate higher than the UK minimum
wage that is set independently, updated annually and based
on the cost of living in London.
Our two offices outside London employ staff who are
remunerated above applicable minimum or living-wage
requirements.
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LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT Liontrust does not use zero hours contracts.
Liontrust’s Equal Opportunities and Diversity Policies outline
that all Liontrust employees (temporary and permanent),
partners, contract workers and job applicants are treated fairly
and are offered equal opportunity in selection, training, career
development, promotion and remuneration.
SUSTAINABILITY, CLIMATE DISCLOSURES (TCFD) AND
CORPORATE RESPONSIBILITY
Liontrust takes seriously its role in society, our obligations to
shareholders and our responsibilities as custodians of client
assets while remaining committed to environmental, social and
governance (ESG) initiatives.
Liontrust has made voluntary climate-related disclosures for
a number of years and welcomes the new requirement for
all premium listed companies to include consistent climate-
related financial risk disclosures, providing better information
to investors, lenders, insurers, and other stakeholders. Please
see the section below on Financial Stability Board’s Task Force
on Climate-related Financial Disclosure for further details.
As part of our commitment, we are signatories to a number of
industry initiatives in this area including:
to the Stewardship Code and how Liontrust complies with
the responsibilities laid out within the compliance statement,
please visit our website.
Institutional Investors Group on Climate Change (IIGCC),
the European membership body for investor collaboration on
climate change. A core consideration for becoming an IIGCC
member in April 2022 was to ensure Liontrust set robust net
zero reduction targets to support our commitment under the
Net Zero Asset Managers Initiative (NZAMI) and to evaluate
our engagement on climate issues by acting collectively with
other institutions. Liontrust will submit our interim net zero
carbon reduction targets and proposal to NZAMI within the
next 12 months as per our commitment and will increase the
proportion of assets in our portfolios which are aligned with
the goals of the Paris Agreement over time.
The United Nations Principles for Responsible Investment
(UN PRI), a set of voluntary guidelines that help companies
to address social, ethical, environmental and corporate
governance issues as part of the investment process. Liontrust
joined the PRI in 2018, its wider approach to the PRI’s six
responsible investment principles was last assessed in 2020
by the UN PRI for the year ending 31 December 2019, and
the 2020 assessment transparency report is available on our
website.
The Financial Reporting Council’s (FRC) Stewardship Code, 12
principles for stewardship including the responsible allocation,
management and oversight of capital to create long-term value
for clients and beneficiaries leading to sustainable benefits for
the economy, the environment and society.
Liontrust reported against the 12 principles of the revised
Code in April 2021 and was proud to be a accepted as
first round signatories to the Code. For this year’s response
A full list of all associations and initiatives that Liontrust is
involved with are outlined in our FRC Stewardship Compliance
Statement on our website.
Liontrust has continued to invest in additional, specialist
resources (both systems and people) to increase our commitment
to integrating ESG throughout the business, including into
our investment processes and risk analysis with dedicated
governance and stewardship staff.
ESG Rating Distribution
The chart below shows the distribution of the MSCI ESG ratings of our holdings as at 31 March 2022. This includes an increase
in the leading rated AA and AAA companies in the portfolios’ scores from last year (2021: 40% 2020:34%), a decrease in the
average rated A, BBB, BB A companies in the portfolios (2021: 43% 2020:48%) and a decrease in the laggard rated B, CCC
companies in the portfolios’ score from last year (2021: 21% 2020: 4%)
30%
21%
40%
30%
20%
10%
0%
10%
AAA
AA
A
BBB
15%
15%
7%
BB
2%
B
0%
CCC
Not rated*
*‘Not Rated’ shows the percentage of the portfolios that are invested in companies that do not have an ESG rating from MSCI,
i.e. outside of their coverage, mainly due to size.
57
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT Stewardship for our investments
Liontrust has always recognised that good governance &
stewardship, sustainability and social impact are important
considerations in choosing and monitoring investments. In
particular, we have committed to integrate sustainability
appropriately throughout the business to:
• enhance returns and risk management;
• demonstrate effective consideration of ESG exposures;
• exercise responsible stewardship of investee companies;
and
• show the positive impact our investment management
activities have on our clients and wider society.
Our Responsible Investment Policy provides details of our
engagement led approach and how we manage our
stewardship at both a Group level and for individual teams.
In 2022, to be as transparent as possible, we will look to
document and publish comprehensive guidance to investors
and shareholders on ESG integration within each of our
investment processes to help ensure all clients understand
exactly what we do as well as what we don’t do. We
published our inaugural companywide engagement and
voting report and submitted our second Stewardship Code
compliance statement to the Financial Reporting Council on
how we conducted our stewardship activities in 2021.
Our Governance and Stewardship team co-ordinates the
Group’s overarching approach producing; ESG reporting;
climate and emissions analysis; drawing up and implementing
our voting policies; and engaging with companies. The team
supports our fund managers, helping to integrate and enhance
sustainability for our clients.
Liontrust’s approach to ESG Integration
Liontrust believes that the best people to understand the future
impact of ESG factors on a company are those that analyse
the businesses: our fund managers. Each team is truly active
and take a long-term approach to investment. This creates
a deep understanding of the companies they invest in and
promotes good governance and stewardship. Liontrust does not
impose a one-size-fits-all approach to integrating stewardship
and ESG risk into investment processes. Each Liontrust team
has spent years developing its investment approach and
understands what characteristics are important to providing
positive outcomes and driving the long-term returns we aim to
deliver to investors. We have been working to provide each
team with the information and support needed to allow them
to integrate ESG in the optimal way, ensuring their processes
are enhanced and complemented by this work rather than
imposing a centralised solution. However, by including ESG
considerations into all our investment processes, we improve
our ability to understand a business and its ability to create,
sustain and protect value with the aim of ensuring it can deliver
outcomes in line with our clients’ expectations. We are careful
to ensure it is clear that although all teams have access to ESG
information to include into their investment processes, not all of
our teams are running sustainable products.
Our responsible investment framework aims to challenge and
support our fund managers, helping to integrate and enhance
stewardship and the management of sustainability risk and thus
producing better outcomes for all our clients. The remit of the
Portfolio Risk Committee (the ‘PRC’) has been updated to include
the oversight of ESG related risk within the portfolios and we
are putting in place the reporting that enables the Committee
to review controversies, ESG ratings and the climate impact
for each of the funds and teams. Using this data, detailed
ESG reporting will be available to the investment teams and
the PRC to show the ESG positioning of each fund. They will
highlight the ESG risks by integrating the portfolio data with
the third party ESG data including:
• ESG ratings for each individual company.
• Aggregated portfolio level ratings versus a relevant
benchmark.
• Controversy reporting.
• Carbon analytic portfolio reports versus a relevant benchmark.
• Climate Value at Risk portfolio reports versus a relevant
benchmark.
• Impact portfolio reports versus a relevant benchmark where
appropriate.
Our responsible investment framework aims to challenge and support our fund
managers, helping to integrate and enhance stewardship and the management of
sustainability risk for all our clients.
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LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT 59
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT We expect companies to conduct their business in compliance
with the UN Global Compact guidelines and to adhere
to corporate governance standards
(including pay &
remuneration structures, diversity and other ESG disclosures) in
their domestic markets or to explain why not doing so is in the
interests of shareholders.
Any investment highlighted as breaching these norms will
be reviewed by the PRC to ensure the ESG risks have been
appropriately considered within the investment decision and
do not pose a significant sustainability risk.
Our Sustainable Investment team has fully integrated ESG
factors and analysis throughout its process, including using
long-term sustainability themes to identify potential opportunities
and using a combination of screening and thematic and
sustainability analysis with a proprietary Sustainability Matrix
that combines product sustainability with ESG management
quality. These are all binding aspects of the investment process.
As part of the Liontrust Global Fixed Income team’s process,
they judge whether a company is an attractive long-term
investment by analysing certain key factors specified
in their proprietary “PRISM” research framework.
The ‘S’ in the PRISM stands for Sustainability in
relation to environmental and social factors.
The team seeks sustainable investments in
all senses: investing in issuers that can
service their debt beyond the maturity
of any bonds purchased and not be
subject to large contingent liabilities
or technological disruption. The
‘M’ stands for Motivation: in
assessing how the interests of
the managers and owners of
a company are aligned with
bond investors. Effectively, this
is about good governance. The
team’s preference is for considerable
alignment with owners and management whose
motivations are aligned with their bondholders and invested in
the success of their enterprise over the long term.
The Economic Advantage (EA) team has added ESG as a risk
factor to the process’s existing risk grid: the risk grid operates
within ‘stage two’ of the EA investment process to determine
the weighting of a stock once it has been selected for purchase
under ‘stage one’ (after consideration of its intellectual capital,
CFROC profile and valuation). The practical implications of this
approach are that the team will not exclude a stock on account
of ESG factors alone but an adverse ESG score – similar to an
adverse valuation score – will reduce its weighting.
The Multi-Asset investment team combines ESG data from third
parties and a dedicated questionnaire, followed by face-to-face
due diligence meetings with both an RI (Responsible Investment)
representative at company level and an investment manager
of the respective fund(s). The idea of this deeper mode of
enquiry is to explore how firms are incorporating ESG across
their top-down processes, what their priorities are and the
current challenges they face. At fund level, the team looks at
how this is performed in practice and by whom, among other
considerations. These insights form part of the risk framework.
For our other investment teams, the management of sustainability
risk forms part of the due diligence process. Each team reviews
potential investments using its risk framework, which includes
assessing the risk that the value of such investments could be
materially negatively impacted by an ESG event or issue,
and the sustainability risks of each investment. They may also
conduct fundamental analysis on each potential investment to
further assess the adequacy of ESG programmes and practices
of a company to manage the sustainability risk it faces.
‘Controversies’ are also monitored to investigate and assess
issues that may include the impact of company operations,
governance practices, and/or products and services that
allegedly violate national or international laws, regulations,
and/or other commonly accepted global norms. The information
gathered from this analysis may be considered in deciding
whether to invest or the size of the position in portfolios.
The Majedie Asset Management acquisition on 1
April 2022 brings a range of funds that adopt
integrated ESG materiality assessments into
the team’s investment process. Materiality
assessments are the platform on which they
examine and consider ESG related issues
– alongside any other risk or opportunity
a company faces – and they disclose
what this means for holdings within
their funds.
Task Force on Climate-related
Financial Disclosure (TCFD
Compliance Statement)
and
climate-related
Recommended Disclosures
Liontrust has been making voluntary
financial disclosures
aligned with the TCFD Recommendations
since
2018; however, this report marks the first covered by the
new Listing Rules on Disclosure of Climate-Related Financial
Information under the FCA rule (captured in LR 9.8.6R(8).
We have included in this annual report our climate-related
financial disclosures, which are consistent with the TCFD
Recommendations and Recommended Disclosures, details of
which can be found below.
Introduction
Liontrust supports the goals of the Paris Agreement to limit
global warming to well below 2, preferably to 1.5 degrees
Celsius, compared to pre-industrial levels. We believe that
climate change will be a defining driver of the global economy,
society and financial markets in the future, and that investors
will be unable to avoid the impacts of this. We are committed
to continuing to develop our analysis and response to climate-
related risks and opportunities in order for our business to
thrive and to mitigate the risks and safeguard our client’s
investments. Liontrust participates in several working groups
that are concerned with the impacts of climate change, for
60
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT example the Sustainable Investment team is on the PRI Investor
Working Group on the Just Transition.
For our own business, Liontrust has been carbon neutral
on a Scope 1 and 2 emissions basis through offsetting
for several years. We continue to review our operational
emissions with the aim of minimising or reducing them. As
an asset management business, the indirect emissions from
our investments have the greatest potential impact on the
environment. Liontrust committed in May 2022 to become a
signatory of the Net Zero Asset Managers’ Initiative with the
aim of limiting warming to 1.5C in our Scope 3 investments,
thereby having a commitment to becoming net zero by 2050.
We have been a supporter of TCFD since September 2018.
TCFD seeks to provide investors with increased awareness of
climate-related risks and opportunities, and we support this
objective through our operational activities, engagement with
investee companies and work with partner organisations.
We have been signatories to the CDP (Carbon Disclosure
Project) since 2017 and have recently become members of
the Institutional Investor Group on Climate Change (IIGCC). In
May 2021, Liontrust signed the Montréal Carbon Pledge and
endorsed the 2021 Global Investor Statement to Governments
on Climate Change ahead of COP26 in Glasgow.
This is the third year for Liontrust to report relative to the
TCFD recommendations and we have structured this update
in line with the TCFD Recommendations and Recommended
Disclosures to provide insight into our governance, strategy,
risk management, and metrics and targets related to climate
change. We have reported on how we address climate change
risks and opportunities in our operations and business and we
also describe how we manage climate change risks in our
investment portfolios on behalf of our clients under the TCFD
recommendations. We will continue to work on improving our
data and reducing our emissions.
The key climate change factors that may impact us are
increasing climate change regulation, actual changes in
climate and its impact on crops, water and extreme weather.
Given the long-term nature of the above risk scenarios and
ongoing mitigation activity we have concluded that there is
currently no material impact from these risks on our current
financial position. Accordingly, climate risk is not considered
within our range of financial sensitivity and impairment testing
scenarios.
Liontrust will report on its Scope 1, 2 and 3 disclosures on
a calendar year basis to allow consistency for current and
future carbon data for all our internal and external reporting
commitments such as PRI, CDP and for the upcoming
requirements from the FCA to make disclosures (including a core
set of climate-related metrics) on our products and portfolios.
Governance
The Group’s Board has oversight of all corporate obligations,
including those related to climate risks and opportunities and
other ESG considerations and commitments and has put in
place appropriate governance structures to manage these,
further details of our governance are included on pages 89
to 93.
The Board regularly discusses the potential impact of climate
change on our business and our future strategy; this includes, the
opportunities for climate and ESG related investment products,
the impact on our ability to deliver long-term superior performance
due to the climate change risk on our client’s investments and
the integration of ESG factors into the investment processes.
The Board receives regular reports on the Group’s governance
and stewardship activities including climate-related aspects
receiving six reports during the year which included updates on
supported climate-related initiatives and approving the Group-
wide engagement priorities. These included the commitment
to engage with the highest carbon emitting companies within
Liontrust’s investment portfolios to ensure they have strategies to
reduce carbon emissions at a rate consistent with limiting global
warming to 1.5 degrees. During the year, the Board met with
the Head of Governance and Stewardship on two occasions to
discuss Liontrust’s sustainability strategy as well as being updated
on initiatives and the progress being made to meet the strategy
which included carbon footprint analysis for its business and
for its investments. At the Board meeting in March 2022, the
Sustainability and Stewardship Committee (SSC), provided the
Board information on the weighted average carbon intensity
(WACI) of the Group’s funds for which the information was
available (covering approximately 75% of the group’s AUM). This
enabled the Board to undertake a deeper conversation on how to
manage and develop targets for the Group’s Scope 3 emissions.
We continue to work on improving our long-term sustainability
risk planning for the Group, in particular incorporating climate
change into our Group wide risk framework as we grow our
understanding of how climate change will impact us and
our investments. Our remuneration policy covers financial
risks, as well as sustainability risks. Where applicable, the
determination of variable remuneration for relevant individuals
(such as those involved in investment management / oversight
roles) will include reference to their risk-adjusted performance.
Liontrust does not have any quantitative sustainability-focused
performance targets at either a portfolio or asset level and
therefore this is a qualitative assessment in respect of adherence
to our internal procedures for the integration of sustainability
risks as detailed on our website at www.liontrust.co.uk.
Alongside the work on ESG investment risk considerations, the
Risk team have integrated climate models into the capital stress
testing processes used by the Board to manage our regulatory
capital.
We faced some transitional challenges in obtaining relevant
data for our investments (Scope 3), including additional
detailed scenario analysis and endeavour to continue to make
progress in this area going forward.
The Chief Executive is accountable to the Board for overall
Group performance, including climate-related risks and
opportunities. Emma Howard Boyd has been appointed a
Non-executive Director responsible for Sustainability, she
1Liontrust changed its reporting period for all carbon data within this report from financial year end 31 March to calendar year 2021.
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LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT has extensive ESG knowledge and expertise within the asset
management industry. Emma’s insights on climate change will
help align the firm’s sustainability strategy with best practices
and help Liontrust to better understand the opportunities and
risks facing the Group.
The Chief Executive chairs the Sustainability and Stewardship
Committee (SSC) which is a sub-committee of the Management
Committee. The senior management team co-ordinates the
implementation of our strategy and receives regular updates
on our progress through the SSC. The SSC is supported by a
Working Group with wide representation across the Group to
facilitate the development and implementation of our sustainability
strategy. The SSC has met regularly over the year and has focused
on achieving the following aims over the last 12 months:
• enhancing our ESG data and analytics for all our strategies;
• continuing to train our investment staff;
• investing in our company engagement capacity and
resourcing;
• disclosing how we integrate sustainability in each strategy
and across the group;
• increasing our reporting for portfolios with their ESG and
climate characteristics; and
• improving our aggregated group reporting.
Edward Catton, the Chief Risk Officer (CRO), leads and
manages the Group’s overall risk strategy including climate risk
management measures, such as operational and prudential
climate-related risk. The CRO sits on the SSC and chairs
the Sustainability & Stewardship Working Group, which is
responsible for implementing, overseeing, and supporting
the Group’s governance and stewardship framework and
policies. He also chairs the Portfolio Risk Committee which
is responsible for overseeing how our investment teams
manage climate and ESG risk within our portfolios and on
our underlying investee companies.
The ESG Regulation Working Group coordinates the Group’s
compliance with current and emerging regulations, which
have a climate-related focus, such as the Sustainable Finance
Disclosure Regulation (SFDR) and the EU Taxonomy.
As part of the recent acquisition of Majedie Asset Management,
Cindy Rose has moved to Liontrust as Head of Responsible
Capitalism. Cindy has brought more expertise on how to drive
our sustainability strategy forward and provides us with thought
leadership in this key area of focus for the Group.
Strategy
Liontrust continues integrating the opportunities and risks from
climate change into its overall business strategy, which is
summarised on pages 14–19.
Over the past three years, Liontrust has made good
progress on the TCFD recommendations, established board-
level oversight and an internal climate-risk management
process, developed an implementation plan and aligned
the governance structures around delivery of this plan.
Furthermore, we have provided appropriate training and
guidance to the Board and initiated regular portfolio analysis
to help identify and engage with the highest carbon emitting
companies held across portfolios.
Management have identified three key potential impacts of
climate change on our business and our future strategy:
• the opportunities for climate and ESG related investment
products;
• the impact on our ability to deliver long-term superior
performance due to the climate change risk on our client’s
investments; and
• the integration of ESG factors into the investment processes.
We have provided detail on the associated potential risks
and opportunities below.
Client demand for ESG and Sustainable products have
increased significantly over the last few years and we have
seen the assets managed by our Sustainable Investment team
grow accordingly. The UK sustainable product offering is
comprehensive and although some clarifications to the UK
products have been made over the last five years, in particular
following the publication of additional guidance from the
FCA, no new sustainable products have been launched.
The offshore range of sustainable funds has increased, with
three new funds since 2018 including a Global Growth fund
and a Global Multi-Asset fund. These sustainable offshore
funds are aimed at the European market and have more than
£500m in assets. There is a risk that the Group does not
have the right products for clients as their demands change in
response to climate change, however Management believe
that the Group have a diverse range of products that should
be suitable for client’s needs under various climate change
scenarios. A prolonged period of time when the price and
profitability of fossil fuels increase significantly and therefore
boost the share prices of traditional energy companies, as
has happened during the war in Ukraine, may act as a
headwind on demand for sustainable investment funds.
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LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT Liontrust’s fund management teams have clear, well defined
investment processes that are consistently applied to our
products. We believe these investment processes allow us
to deliver strong active performance over the medium to
long term, however there is a recognition that there will be
periods when an investment process underperforms. This may
be during periods of rising interest rates, or style shifts in the
market due to events such as the Ukraine conflict. We believe
that climate change will be a defining driver of the global
economy, society and financial markets in the future, and that
investors will be unable to avoid the impacts of this. There is a
risk that some of our investment processes fail to identify these
opportunities and that an investment process is no longer
able to provide long term superior performance. The Group
has a diversified range of investment processes including
ones that specifically look to benefit from the opportunities
due to climate change and technological innovation.
We expect our fund managers to consider these climate-
related risks in their investment decision making as part of
their due diligence, including consideration of the effects of
carbon pricing, substitution of existing products and services
with lower emissions options, changing customer behaviour
and stranded assets. Liontrust has provided each team with
climate change training and tools and access to specific ESG
analysis and ratings for their investments. We are pleased to
see more of our third-party research providers integrating this
ESG analysis on a company or sectoral basis as a matter
of course and allows us to gain a wider appreciation of the
risks and opportunities in our investments. We have been
working with each of our teams to formally integrate ESG
into their investment processes so the teams can ensure the
portfolios are better prepared for climate change. The Head
of Responsible Capitalism is working closely with each of
the teams and we will be publishing detailed information
on how the teams are integrating ESG and sustainability
considerations, including climate scenarios, within investment
processes in the next year.
Liontrust has worked during the year to understand its resiliency
towards climate-related risks. The Board has considered the
results of formal climate scenario testing where appropriate
which is undertaken as part of the Group’s holistic risk
assessment on all risks and opportunities that it faces. This
forms part of Liontrust’s risk register and heat map which it
monitors internally.
Further work is being done on climate scenario testing for
the investments held, for which we have struggled to find a
third-party provider who could accurately and effectively help
the Group with this assessment for its investments. Liontrust
is making significant investment in its data management
capabilities and hope to make progress on this challenge
over the next year.
Engagement Strategy
Liontrust’s 2021 engagement strategy included engaging
the highest carbon emitting companies, Global Compact
Compliance and gender diversity on boards. We also
engaged heavily on board and committee composition
with small and micro-cap companies, often as a follow up
to our voting. Liontrust’s Stewardship Manager leads the
engagements on the company-wide strategy. These included
the commitment to engage with the highest carbon emitting
companies within Liontrust’s investment portfolios, to ensure
they have strategies to reduce absolute carbon emissions at a
rate consistent with limiting global warming to 1.5 degrees.
In 2021, Liontrust engaged with the top five contributors
to our overall financed emissions, as indicated by our ESG
service provider, MSCI. We also met with Carbon Tracker
and Industry Tracker to understand some of the sector-specific
nuances. Over the course of the year’s engagements,
changes have been made to the commitments and targets set
by some of our investee companies that we have supported.
We had many other meetings with companies on their carbon
reduction plans where requests were made to use science-
based targets and/or ensure they had appropriate short to
medium-term targets to track progress. We are pleased that
many of our investee companies announced net zero targets
during the year and we will be continuing this engagement
into 2022 to ensure they have set ambitious targets with
clear plans to achieve them. Examples of these engagements
are highlighted in Liontrust’s Engagement and Voting report
available on our website.
The Sustainable Investment team engages with its holdings
directly on ESG factors and has its own engagement
priorities. For a full overview of the Sustainable Investment
team’s progress on its engagement priorities, see the team’s
Engagement and Voting Report.
Summary and Actions for 2022
During the year we have continued to refine our climate
strategy and risk management; further integrated climate
risks in Liontrust’s investment risk management; continued
to support our fund managers with more tools and further
training on carbon; maintained the monitoring of the carbon
footprint of all the equity and fixed income portfolios and
expanded our engagement with investee companies on their
decarbonisation strategies.
63
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT Following our analysis and work throughout the last year, we
are now taking the following steps in 2022:
This is a short-term risk; non-compliance with current regulation
would have an impact in the short term.
• set net zero interim targets for a percentage of our AuMA
financed emissions in line with NZAMI;
• improve our ESG disclosures to meet the new regulations
and improve transparency for our investors;
• publish detailed information on how the Company is
integrating ESG including climate scenarios within investment
management teams;
• approve our refined strategy and approach towards climate
risk at Board level;
• finalise the integration of climate risks in Liontrust’s investment
risk management;
• continue to support the fund managers with further tools and
more training; and
• continue to engage with and encourage high carbon
emitting companies to prepare for the transition to a low
carbon economy.
Risk Management
Liontrust will continue to take into account short, medium,
and long-term risks from climate change that could have a
material financial impact on the organisation. Liontrust has
determined that short term should be considered as less than
3 years, medium-term horizons are between 3 and 10 years,
and long term is considered 10 to 25 years. We have not
identified specific climate-related risks and opportunities
beyond 25 years, but our organisation’s investment and
planning time horizon is typically 3 to 5 years.
The key factors that Liontrust considers in formulating these
horizons included risk modelling, minimum recommended and
typical holding periods for investment products, regulation,
actual and expected changes in climate and its impact on
extreme weather. Liontrust defines a substantial financial
impact as being greater than 1% of our adjusted profits.
Transitional Risks
Risks arising from changes in policy or new technologies.
Current regulation: Group operations: Liontrust has a
compliance framework which help to ensure we adhere to
existing regulations. The compliance and internal audit teams
verify the Group’s activities and operations meet current
regulations. As regulation becomes more complicated and
different countries introduce separate regimes, there is an
increasing chance of non-compliance. Professional advisors
and lawyers help to ensure that regulations and laws are
appropriately understood and implemented.
Investments: Companies held in the Group’s portfolios and
funds are subject to regulation. Failure to adhere to the
requirements may result in censure or fines which can have
a significant impact on the valuation of an investment. For
example there have been significant fines and lawsuits for
Volkswagen for falsifying the emission tests for their cars, there
have also been fines issued for greenwashing by the SEC.
This is a short-term risk, non-compliance with current regulation
would have an impact in the short term.
Emerging regulation: Group operations: While there is
no certainty regarding the nature or extent of emerging
regulations, we do expect that they have the potential to have
a material impact on our financial performance and continued
operations. Liontrust strives to be a in a position where
adherence to emerging regulations is established in a timely
manner, ensuring internal working groups are established
and requisite documentation and processes are created and
embedded into our procedures.
Liontrust is already aware of a number of potential areas of
emerging regulation relating to climate change that could have
an impact on the business including the Sustainability Disclosure
Requirements (SDR). Upcoming climate-related regulation and
changes relating to current climate regulation are discussed
and managed in the ESG Regulation Working Group which
was established in late 2020 to help implement the European
Sustainable Finance Disclosure Regulation (‘SFDR’).
Emerging regulation is included as part of our horizon
scanning process. Our Regulatory Change Lead identifies
emerging regulation which enables us effectively plan for
their implementation. We also leverage our membership of
industry groups and our professional advisers experience and
expertise to track upcoming challenges and provide feedback
on industry consultations where appropriate. We expect
emerging regulation related to environmental impact and
climate change to pose a medium to longer-term risk.
Investments: Monitoring emerging regulation is considered
relevant to our ongoing investments as valuations can be heavily
impacted by proposed regulation, particularly where there are
significant costs or opportunities arising from compliance or lack
of compliance. It is likely that these regulations will impact the
majority of the asset classes and industries in which we invest.
Investment research increasingly includes the impact of
emerging climate regulation risks into the analysis of companies
and sectors. Failing to address these issues could result in not
64
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT meeting the needs of our clients in the medium to long term,
particularly with respect to their expected returns and volatility,
as well as the protection of the underlying capital. This is
particularly true of smaller companies, which were previously
not expected to report on their environmental impact. We
support our investee companies by engaging on developments
as we identify them.
Technology: Technology can help mitigate climate-related risk,
including use of systems to identify issues and to manage risk.
Group operations: Liontrust aims to optimise renewably
sourced technologies within our own operations where
available. For example, after moving to the Cloud for the
bulk of our information processing requirements, we are now
using renewable energy to power our infrastructure and have
reduced the energy requirements of our connectivity by utilising
rapid uptake virtual connections rather than dedicated access
to always-on servers. The Group uses video conferencing
facilities and virtual desktop
improve
technology
communications and reduce the need for travel.
to
Liontrust is a founding member of the Sustainable Trading
network which is dedicated to transforming environmental,
social and governance (ESG) practices within the financial
markets trading industry. The network brings firms together
to devise practical solutions to industry specific ESG issues
as well as providing a mechanism for self-assessment and
benchmarking.
Investments: We believe that the risks associated with ignoring
technological advances could have a material impact on
the financial performance and valuation of our investee
companies. However, we also believe that the opportunities
provided by adoption of greener technologies can outweigh
the risks in many areas. Several of our funds focus on the
opportunities created by innovative companies looking to take
advantage of technology change.
Liontrust is engaging with those investee companies with
significant climate-related risks to encourage the use of
technology as part of their planning to transition to more
sustainable options. Legacy investments risk becoming stranded
by a competitively priced renewable energy technology. We
mitigate this risk by engaging with the investee companies,
to monitor, support and encourage a transition to more
sustainable options.
Innovation in technology is a medium to long-term risk, with
any impacts from technological advances typically expected
to occur over a number of years.
Legal: Group operations: Liontrust recognises the increasing
risk of climate change litigation, particularly with respect
to those cases that link human rights to poor environmental
practices. However, we do consider this to be of relatively low
risk to our ongoing operations, as we are actively committed
to understanding, addressing and ultimately reducing our
emissions on a Group-wide basis. We also have made
public commitments including emission targets, endorsing PRI
investor statements on Sustainable Palm Oil Expectation and
on Deforestation and Forest Fires in the Amazon. As discussed
in the preceding sections, we ensure compliance with existing
regulation as part of our general environmental policy. We also
endeavour to understand and adapt to new regulation as it
arises. We monitor developments in this risk area, both in the
UK and globally, to ensure that we have a current understanding
of the current legal issues related to climate change. This is a
medium to long-term risk, with any impacts from these events
expected to occur over a longer period in the future.
Investments: Failure to adequately prepare for, comply, or
ignorance of, developments in climate change and associated
regulation could result in litigation and the costs, fines or
reputational damage can impact the valuation of our investee
companies.
To mitigate this risk, we actively track controversies surrounding
any of our investments and engage with those companies as
well as the larger carbon emitters to understand the issues and
encourage resolution in the interests of our clients. We also
are aware that our reputation could be negatively affected
by continuing to engage with companies that do not meet
their legal or societal obligations even if we are encouraging
change. This could potentially increase our legal risk by
making us party to lawsuits or other legal remedies brought
about by other stakeholders. This is a medium to long term
risk, with any impacts from litigation expected to occur over a
longer period in the future.
Market: Climate change may have a negative impact on
market stability with higher earnings volatility and costs. There
may also be a significant divergence in valuation between
companies most prepared for the implications of climate
change versus those least prepared.
Group operations: Liontrust earns revenue from assets
under management. Increased market volatility, particularly
a drawdown, may have a negative impact on Liontrust’s
revenues. As a listed company, it may also reduce the ability
of, or increase the costs for, Liontrust to raise capital.
Overall, Liontrust considers that, in many cases, a shift in
consumer demand for ESG products and services due to
climate change considerations represents an opportunity,
particularly as we anticipate that these consumer preferences
for climate-friendly products will accelerate over time. The
65
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT last few years have seen a significant increase in sales of
sustainable funds led by client demand. Our product offering
includes funds that explicitly take into account the potential
impact of climate change – targeting companies expected
to benefit from the transition and with lower levels of carbon
emissions.
This is a short to medium term risk, with any impacts from these
trends expected to occur over the next few years.
Reputation: Loss of reputation can have a significant impact on
our business, failure to integrate climate change risk can have
a significant impact on our reputation.
Liontrust have modelled a number of scenarios in its capital
planning including:
• reduction of assets under management;
• capital raising;
• sales of our product mix changing depending on future
appetite for climate friendly products.
This is a short to medium term risk, with any impacts from these
trends expected to occur over the next few years.
Investments: In many cases, a shift in consumer demand for
certain commodities, products, and services due to climate
change considerations represents an opportunity, particularly
as we anticipate that these consumer preferences for climate-
friendly products will accelerate over time.
Our sustainable funds identify companies
in the market that are expected to benefit
from this shift.
The risk of potential loss through holding
investments in the market in the face of
price movements, arises mainly due to
uncertainty about future prices of financial
instruments held in the portfolios and it
is incorporated into our due diligence
processes when reviewing investments.
As our investors demand more climate-
friendly investment options, a key risk
for us is not managing our exposure to
holdings in businesses that contribute to
or are transitioning to a low-carbon economy. A secondary
risk for us is to remain invested in industries or companies
that have not adequately planned for the green transition.
However, both of these risks are mitigated to some extent
within the portfolios managed by our Sustainable Investment
Team after their launch of their Sustainable Investment Team’s
1.5 degree energy transition challenge within their portfolios.
Liontrust will continue to engage with our high carbon emitting
companies across all investment teams to encourage our
investee companies to transition to a low carbon world.
Group operations: We believe that reputational risk as a result
of failing to address climate change issues could be a material
risk to our business. Our commitment to, and disclosure of, our
sustainable activities including compliance with our regulatory
requirements, various climate change initiatives, and ESG
integration work is transparent will meet shareholder and other
stakeholder expectations reducing the chance of reputational
damage. The Risk Management framework highlights the key
reputational risks to management and the Board that may lead
to significant reputational loss.
Investments: The biggest reputational risks for us as investors
are greenwashing and being associated with investee
companies that are perceived as being undesirable due to
sectoral, environmental, political or societal factors. We have
put in place governance structures including the Sustainability
Advisory Committee and the PRC to
ensure that our teams do what we say
they do. Our teams mitigate these risks by
assessing whether a potential investment
has the appropriate measures to address
climate and ESG issues and by focusing
our engagement with those companies
at highest risk. All investment teams
have access to MSCI ESG manager for
ESG ratings, carbon analytic reports
and controversies reporting to help them
identify potential issues.
This is a short to medium term risk, with
any impacts from these trends expected
to occur over the next few years.
Physical Risks
Risks arising from environmental events like floods or storms
could impact our business operations as well as the operations
of our investments. On the investment side, we engage our
largest emitters on their carbon risks, including those related to
physical location or operations. In terms of Liontrust’s operations,
we assess our carbon footprint at all of our locations and also
include carbon related risks and opportunities in our risk matrix.
These cover potential physical risks from global warming.
-77%
On average, the Sustainable
Future funds emit 77%
less carbon dioxide than
the markets in which they
are invested
The recent conflict in the Ukraine has triggered significant
price shocks which may have reduced the market’s capacity
to absorb the costs stemming from climate change and the
transition costs towards sustainability.
Acute physical:
Group’s operations: Liontrust has offices in London, Edinburgh,
and Luxembourg. They are currently in locations safe from
some of the more extreme weather events such as flooding,
66
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT In January 2022, it was
announced that 12 of
the Liontrust funds were
awarded the 5-Crown
rating from FE fundinfo,
reiterating the breadth of
our investment capability
67
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT earthquakes, and tornadoes. However storms and other
weather events may impact us indirectly via our reliance on
electricity, the internet or our staff being able to travel into
the office. Our operational resilience planning has addressed
these risks to ensure that we can continue to operate from
outside the offices. This is a short term risk, with any impacts
from these events expected to last less than a week.
Group’s prudential risk: Liontrust carried out analysis on how
extreme weather could affect our prudential risk, further details
within the Risk Management section of this report.
Investments: Climate change is already impacting many
industries, through more extreme weather patterns and storm
events. Our existing or potential assets could be impacted by
discrete extreme weather events resulting from climate change.
These events could impact the valuation of our investment
assets. Company research is increasingly including the impact
of potential physical risks into their analysis of companies
and sectors and is allowing us to better understand and
then challenge our investee companies on these risks and
opportunities. This can manifest as a reduction of yield in some
sectors or as uncertainty with respect to expected earnings or
planned yield for others. Both of these could present a risk
to Liontrust in their investments. Liontrust is also using MSCI’s
Climate Value at Risk module to understand how these risks in
our portfolios.
Events such as flooding or storms would be expected to have
a short term impact on a small number of business and so have
limited impact on a diversified portfolio.
Chronic physical:
Group’s operations: A chronic physical risk that is relevant to
continuing operations is Global Heating. Permanent changes
in temperature can impact, impede or impair the ability to
operate on an ongoing basis. For example, changes in
average temperature could require our own offices to increase
the use of heating or cooling capacity, which could lead
to power outages, significantly increased power costs or
other potentially negative impacts on our ability to continue
operations. This could result in decreased profitability in many
sectors. This is a medium to long term risk, with any impacts
from these events expected to occur over a longer period in
the future.
Group’s prudential risk: Liontrust carried out analysis on how
climate change could affect our prudential risk, further details
within the Risk Management section of this report.
Investments: The same impacts listed above on Global
Heating will also be felt by many of our investee companies.
Sea level rise (‘SLR’) due to climate change also represents one
of the most pervasive chronic physical risks to coastal areas
globally. Some of the invested assets of Liontrust’ portfolios
and funds are located in areas that are considered particularly
vulnerable to physical risks such as SLR due to climate change
and therefore the value of these assets may be significantly
impacted. Company research is increasingly including the
potential impact into their analysis of companies and sectors
and Liontrust is using MSCI’s Climate Value at Risk module to
understand how these risks in our portfolios. This is a medium
to long term risk, with any impacts from these events expected
to occur over a longer period in the future.
The use of tools and climate-related scenarios, including a 2°C
or lower scenario for our investments are described in more
detail in the “Further information on Liontrust’s investments’
climate risk and emissions” section below.
Risk Management
The Board have put in place a risk framework which includes
the potential risks of climate change for our business. Details
of our principal risks and how we manage them are included
in our Strategic Report. From a climate perspective, there
are three key aspects of risk management, Enterprise Risk
Management, Prudential Risk Management and Investment
Risk Management.
risks are evaluated
Enterprise Risk Management
Climate-related
from a bottom-up
perspective via our risk self-assessments performed by each of
the teams that provide a Group wide view of the risks faced
by the different departments. They are also considered from a
top-down perspective when we are setting our risk appetite.
Liontrust may be impacted directly, via our outsource partners
or through our investments in companies on our clients behalf.
The impacts may come from physical risks (extreme weather
events, or supply shortages) or from exposure to transition
risks which arise from society’s response to climate change
(technological change, social upheaval or regulation). These
can change business costs, alter the viability of products or
services, or alter asset values. There are also legal costs and
potential liabilities for climate-related actions.
Prudential Risk Management
Liontrust, as a regulated financial service business, considers
its capital requirements on an ongoing basis and must maintain
minimum capital levels according to its size and level of risk.
More details can be found in note 2 of the financial statements
‘Financial risk management’.
We include various climate-related scenarios into our internal
capital adequacy assessment program to simulate the impact
of climate change on our prudential modelling. Liontrust
modelled scenarios to quantify and better understand the
impact of climate change risk on our future prudential risk,
(including credit, market, operational, liquidity and insurance
risk). Quantifying the financial risk from climate change which
will has a broad and far-reaching impact on the global
economy is complex.
Estimating the potential impact of these risks involves assessing
the effect of multiple potential climate pathways and the efforts
of reducing carbon emissions over several decades. As part of
68
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT our approach to quantify and better understand the impact of
climate change risk on our future prudential risk, we looked at
historical data from 1980 to 2016 to provide a sense of the
amount of annual global losses from extreme weather-related
events. This has been summarised below:
• Catastrophic: 1 year of losses +$250bn / 1 in 37 years
• Very Extreme: 2 years of losses +$150bn / 1 in 18.5 years
• Extreme: 10 years of losses +$100bn / 1 in 3.7 years
To access the impact of climate risk for Liontrust, the table below
provides a summary assessment of the likelihood of a risk event
occurring based on the level of historic weather event losses
(i.e. catastrophic, very extreme and extreme) above. Internal
calculations provide an estimate of the subsequent monetary
impact on the Group’s capital if a risk event occurred. This
combination is key, it may not be the actual event that impacts
us, but it’s effect on our ability to raise capital or successfully
claim on our insurance.
Risk Type
Credit Risk
Assumed level of
weather-related
losses (to trigger
a risk event)
Very extreme weather
Market Risk
Extreme weather
Operational Risk
Extreme weather
Liquidity Risk
Catastrophic weather
Insurance Risk
Catastrophic weather
Likelihood Driver
It would take global losses of
+$150bn to trigger a credit risk
event.
It would take global losses of
$100bn that would have a
significant impact on AuMA
decreasing.
It would take global losses of
+$100bn that could lead to a
operational risk event (i.e. failure
of a service provider).
It would take global losses of
+$250bn for a liquidity risk
event to crystalise.
It would take global losses of
+$250bn for an insurance risk
event to occur.
Likelihood Rank
Very Low - Low
Low - Medium
Low - Medium
Rare
Rare
As the table above assesses climate risk from a physical risk perspective, we do not anticipate the impact of transitional risk to be
as significant to Liontrust’s capital requirements. This is due to businesses adjusting and markets repricing to the impact of changes
in climate policy, technology and market sentiment over time compared to the unexpected funding and the lack of uncertainty/
implications from an extreme random weather event.
69
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT Liontrust holds capital against a 1 in 200 year operational
event without insurance mitigation in case our insurers do not
pay out. This ensures that Liontrust can continue to operate in
a situation where the insurers fail due to global losses from
climate-related events.
Investment Risk Management
Investment risk, including climate-related and ESG risk is
overseen by the Portfolio Risk Committee. The Committee
regularly meets with each of the investment teams to discuss
their investment process and questions the teams on the risks
within the portfolios. Part of the role of the PRC is to ensure
that each team is following their investment process, and this
includes verifying that where a product includes specific ESG
and climate requirements in their investment objective and
policy, the team are in fact doing as described.
The PRC also oversees the controversies reporting, ensuring
that where a company has been identified as being potentially
involved in a controversial matter the investment team have
considered their investment and the associated risks.
The investment risk team is working with MSCI to automate the
analysis of climate risk on our portfolios and report these to the
fund management teams and the governance committees in a
consistent manner.
Liontrust also mitigates its exposure to climate change risk
through engaging with the companies we hold to ensure they
are taking appropriate steps to prepare for the future. During the
year, Liontrust undertook engagements with its holdings on their
carbon-related risks and opportunities and, among other requests,
asked companies with the greatest carbon exposures to be more
transparent on their plans for reaching net zero and on the extent
to which these strategies formed part of Board discussions. We
engaged regularly with our highest weighted holdings and report
on these engagements in our Annual Engagement and Voting
report which is available on our website.
Metrics and Targets
Liontrust’s carbon emissions
Liontrust is committed to understanding and reducing our
operational greenhouse gas (GHG) emissions. We use
offsetting to be operationally carbon neutral but aim to minimise
the use of offsetting where possible. This year we worked with
Good Business to calculate our emissions for Scope 1 and
2 emissions as 305 tCO2e (market-based1) as at the 31st
December 2021 these equated to a GHG emissions intensity
of 1.54 tCO2e/Full Time Employee.
Greenhouse Gas Emissions performance
The following information summarises our direct environmental
performance over the calendar year ending 31 December
2021. This statement has been prepared in accordance with
our regulatory obligation to report greenhouse gas (GHG)
emissions pursuant to the Companies (Directors’ Report) and
Limited Liability Partnerships (Energy and Carbon Report)
Regulations 2018 which implement the government’s policy
on Streamlined Energy and Carbon Reporting. During the
reporting period, our measured Scope 1 and 2 emissions
(location-based) totalled 2,612 tCO2e. Our indirect scope
3 emissions from business travel comprised air, rail travel and
mileage emissions. In 2021, our business travel emitted 61
tCO2e. The details are shown in the table below:
Category
Scope 1
Stationary combustion
Scope 2
Electricity (location-based)
Electricity (market-based)
Scope 3
Business travel
Scope 1 & 2 (location-based)
Scope 1 & 2 (market-based)
Total (location-based)
Total (market-based)
Scope 1 & 2 intensity per FTE* location based
Scope 1 & 2 intensity per FTE* market based
Source
Heating oil
All offices
All offices
Air Travel
Rail Travel
Mileage
—
—
—
—
GHG emissions
(tCO2e) FY20211
GHG emissions
(tCO2e) 2021 Calendar
Year (re-calculated)
0
2,583
31.6
0
0.06
5.61
2,583
31.6
2,589
37.27
12.6
0.02
13
2,600
249
37
4
20
2,612
262
2,673
323
13.19
1.32
*The emissions intensity calculation is based on a figure of 198 employees in 2021. Overall, our emissions intensity for Scope 1
& 2 emissions (market-based) were 1.32 tCO2e/FTE
1Liontrust changed its reporting period for all carbon data within this report from financial year end 31st March to calendar year
2021. Recalculated data is consistent with the GHG Protocol Methodology. Further information on methodology used is available
in the 2021 Sustainability report (pages 30-32) on our website.
70
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT
Energy consumption
(mWh) 2021
Electricity
Heating oil
UK
Luxembourg Total
12,171
152
12,323
0
51
51
Applicable Scope 3 Categories
Liontrust used the Greenhouse Gas Protocol’s guidance to
identify the most material indirect scope 3 categories that
impact our business throughout our value chain. Liontrust believe
the following three categories have the most impact. We have
decided to monitor the emissions in these categories to enable
us to develop more effective GHG reduction strategies.
Category 1 – Purchased goods and services
We are engaging with our key services providers in our supply
chain, on their scope 1 and 2 emissions that relate to our
business, and to encourage them to decarbonise.
Category 6 – Business travel
Liontrust is committed to off-setting our air and rail business
travel. Given the pandemic there was a minimal amount of
business travel undertaken during the year. Liontrust recognise
that you can successfully conduct some business without
incurring unnecessary travel and that travel can be better
optimised to minimise emissions.
Category 15 – Investments
As an asset management business, the indirect emissions
from our investments have the greatest potential impact on
the environment. These indirect emissions from investments we
own are our greatest source of indirect emissions and account
for the majority of our indirect emissions. See below for further
details on the emissions of our investments.
Methodology
To calculate Liontrust’s carbon footprint, we followed the
Greenhouse Gas Protocol Corporate Standard, an international
standard that is widely regarded as best practice for GHG
accounting and reporting. This has guidance for the various
components of an organisation’s carbon footprint and is
focused on the following principles: relevance, completeness,
consistency, transparency, accuracy.
The calculated carbon footprint for 2021 includes all relevant
Scope 1 and 2 emissions categories, as well as Scope 3
Business Travel.
All six greenhouse gases covered by the Kyoto Protocol —
carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O),
hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and
sulphur hexafluoride (SF6) — were included in the scope of
the carbon footprint. The results have been given in carbon
dioxide equivalents, or CO2e, which is the standard unit of
measuring carbon footprints.
The relevant GHG sources that constituted the agreed
operational boundary for the reporting year are:
• Scope 1: Oil-based heating for offices (Luxembourg only)
• Scope 2: Purchased electricity consumption for own use
• Scope 3: Business travel via air, rail, road
Data was collected in May 2022 for the previous calendar
year 1 January 2021 to 31 December 2021.
The boundaries were set following an operational control
approach. Data were converted into CO2e using the UK
Government BEIS 2021 Conversion Factors for Company
Reporting and Association of Issuing Bodies European Residual
Mixes 2020.
The Scope 1 emissions were calculated using the BEIS
emissions factors.
The Scope 2 emissions were calculated using the BEIS and
AIB emissions factors, following the emissions factor hierarchy
according to the GHG Protocol’s Scope 2 Guidance. Both a
location-based total and a market-based total were calculated
for Scope 2 emissions. The market-based calculation reflects
the energy tariff purchased by Liontrust for each office, with
the residual mix being applied for non-renewable electricity.
The Scope 3 business travel emissions were calculated using
the BEIS emissions factors. Note that the calculations are
based on average data only and don’t take the type of plane/
car or model and engine type into account.
Carbon off-setting
As this data was re-calculated from financial year end to calendar
year, we assume that emissions were linearly distributed throughout
the year and will offset 9/12 (366 tonnes) of the 2021 calendar
year emissions to avoid double counting. Therefore, Liontrust
will purchase 275 tonnes of carbon offsets credits against our
business travel and scope 1 & 2 market-based emissions incurred
during the calendar year.
Liontrust has reduced direct emissions by purchasing green
electricity and, after accounting for this, offset all remaining direct
emissions from our operations (scope 1 and scope 2 emissions).
This means Liontrust is operationally carbon neutral and has
committed to remain operationally carbon neutral.
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LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT
This will empower our investment managers to consider these
risks and opportunities in their portfolios. The group does
not use a single carbon price in its cash flow analysis for
its investments across the Group, but each investment team
would consider the potential impact of different carbon prices
within the individual investment processes as appropriate.
External research will include a range of carbon prices within
company analysis where suitable.
In May 2021, Liontrust signed the Montréal Carbon Pledge
where investors commit to measure and publicly disclose the
carbon footprint of their investment portfolios on an annual
basis. Liontrust published on our website the carbon emissions
of portfolios against their relevant benchmark for all
single equity strategies (Liontrust will explore over the
next year how we can best capture the carbon
Targets and actions
Liontrust has set the following emissions targets for our GHG
emissions:
1. to reduce our Scope 1 and 2 emissions intensity per
member of staff each year; and
2. to be operationally carbon neutral after offset.
Liontrust committed in May 2022 to become a signatory of
the Net Zero Asset Managers’ Initiative with the aim of limiting
warming to 1.5C in our Scope 3 investments. As part of this,
we have committed to targeting net zero emissions from all our
investments by 2050 and are currently finalising our interim
targets for 2025 and 2030.
Liontrust appointed a lead assessor to conduct an Energy Saving
Opportunity Scheme Assessment (ESOS) on our head office to
ascertain what energy saving opportunities we could consider
to reduce our energy consumption, this may be limited due
to the age of our office space. All Liontrust’s offices in the UK
use renewable energy tariffs. Our newly leased Luxembourg
office consumes oil heating as an energy source. If feasible
we will explore if we can source more climate-friendly options
for this office. We shall discuss in further detail our ambitions
on how we propose to reduce our emissions within all three
scopes in the Liontrust Responsible Capitalism report that will
be published later this year.
The Group included ESG metrics in the remuneration of the
Executive team in 2021 and the Remuneration Committee
review these on an annual basis. Further details are in
the Remuneration Report.
on
Liontrust’s
information
Further
investments’ climate risk and emissions
Liontrust uses the Paris Agreement Capital
Transition Assessment Tool to assess our
investments’ exposure to a 2 degree
climate change scenario. As at 31
December 2021, 5.5% of the Liontrust
equity and 7.2% of fixed income
portfolios are in climate relevant
sectors which include power, oil
and gas, coal mining, automotive,
shipping, aviation, cement, steel, and
heavy-duty vehicles which account for
around 75% of global CO2-emissions. This
analysis focuses on asset classes with the most
direct and traceable impact on the real economy,
and for which public data is available.
Liontrust utilises MSCI Carbon Analytics and Climate
Value at Risk modules for all investment teams
(excluding Multi-Asset funds) to provide detailed
carbon emissions analysis across all portfolios. MSCI’s
Climate Value at Risk model identifies transitional
and physical climate-related risks and opportunities
for each portfolio. Analysis of these portfolios has
been conducted and we have identified the highest
carbon emitting companies held across portfolios.
72
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT data of our fixed income and Multi-Asset fund strategies). This
data also reflect the percentage of the portfolio invested in
fossil fuel reserves.
However, data availability remains limited in certain geographies
and asset classes beyond fundamental, long-only, developed
market equity strategies and this means we have not been able to
conduct scenario analysis across the entirety of our assets under
management, although we have done so for the majority of the
portfolios / assets we manage. We continue to develop our
approach over time with the goal of stating the resilience of our
strategy across a range of scenarios in future.
Since 2012, the Sustainable Investment team has
disclosed the aggregated carbon emissions for the
single strategy funds. This work is carried out independently and, on
average, the Sustainable Future funds emit 77% less carbon dioxide
than the markets in which they are invested, have 22% exposure
to companies whose products help to reduce emissions and hold
0% in companies exposed to the extraction and production of fossil
fuels (such as coal miners and oil and natural gas exploration and
production). Further details on its carbon emissions can be found
on our website.
In early 2020, Liontrust’s Sustainable Investment team committed
to its One and a Half Degree Transition Challenge. This involved
engaging with all the companies held in the Liontrust Sustainable
Future funds and challenging them to revisit their decarbonisation
targets and raise their ambition to reduce absolute levels of
emissions at a rate consistent with a one-and-a-half-degree global
average temperature rise. Further details can be found in the team’s
Annual Review 2021 available on our website.
Environmental Policies
Liontrust has put in place an environmental policy that
details the key points of our strategy on the environment,
and this is available on our website.
Environmental KPIs Commercial Waste
Liontrust aims to minimise its commercial waste and to recycle
as much of its commercial waste as possible, with any non-
recyclable items being incinerated to produce energy. In
the year to 31 March 2022, Liontrust recycled on average
5,050kg of materials saving 7,000kg of CO2 (year to 31
March 2021: 1,300kg, 960kg CO2) in our London office.
recognise
and publishing, however we
Liontrust uses only recycled paper in its operations
the
importance of acting in a sustainable manner and
have committed to the carbon balancing scheme
operated by the World Land Trust for all our
published reports as well as continuing to
help fund biodiversity projects with the
London Zoological Society (ZSL).
The Sustainability and Stewardship
Committee monitors the KPIs as part of
their review of the ESG policy.
CO2
Liontrust recycled on average
5,050kg of materials saving
7,000kg of CO2
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LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022STRATEGIC REPORT
Human Rights and Slavery
Liontrust has committed to the preservation of human rights.
Liontrust is vehemently opposed to the use of slavery in all forms;
cruel, inhuman or degrading punishments; and any attempt to
control or reduce freedom of thought, conscience and religion.
prevention activities including policies and procedures. These
measures are designed to ensure we comply with all applicable
laws. All members of the Group undertake regular financial crime
prevention training which includes more detailed anti-money
laundering and insider trading aspects for some of our staff.
Liontrust will not knowingly enter into any business arrangement
with any person, company or organisation which fails to uphold
the human rights of its workers or who breach the human rights
of those affected by the organisation’s activities. For further
information, we publish a statement on the Modern Slavery Act
on our website.
Purchasing, Procurement and Bribery
Liontrust is committed to adhering to the highest standards of
business conduct; compliance with the law and regulatory
requirements; and best practice. The Group has established
an anti-bribery policy to aid Liontrust’s partners/directors,
employees and associated persons in ensuring that they comply
at all times with relevant anti-bribery laws. In implementing this
policy, the Group demonstrates its commitment to preventing
bribery, and establishing a zero-tolerance approach to bribery
in all parts of our operations. We also perform an annual
bribery risk assessment.
Liontrust is committed to procuring its works, goods and services
in an ethically and environmentally sensitive way, yet with proper
regard to its commercial obligations, ensuring that suppliers
deliver to agreed timescales, quality and cost. Purchasing is
undertaken in a manner that encourages competition, and offers
fair and objective evaluation of offers from all potential suppliers.
Vendor conduct guidelines are available on our website. Any
significant transaction or agreement is reviewed by the Board.
Tax
Liontrust aims to pay the appropriate levels of tax in a timely
manner and this means that we comply with our tax filing,
reporting and payment obligations globally. We have developed
a formal tax strategy detailing how tax risks are managed
including governance, systems and controls, Board oversight and
our attitude to tax planning.
We perform an annual tax evasion risk assessment and have
reviewed our procedures to prevent the facilitation of tax evasion.
We do not tolerate tax evasion, nor do we tolerate the facilitation
of tax evasion by any person(s) acting on the Group’s behalf.
Financial Crime and Cybersecurity
Liontrust is committed to the prevention and detection of financial
crime, including money laundering, terrorist financing, bribery
and corruption, tax evasion and fraud. Liontrust has set up a
separate committee to deal with financial crime and cyber
threats which oversees all aspects of the Group’s financial crime
Cybersecurity remains a key focus for us and we have
continued to invest in our technology and systems to remain up
to date. We work with a specialist third party to provide the
Board with a virtual Chief Information Security Officer (vCISO)
to ensure they have the knowledge and skillset to challenge
our IT security team and ensure best practice. A governance
structure overseeing information security with a nominated
responsible Board member is in place. The Board has received
further training this year on cyber threats and challenges and
how Liontrust is investing in our cybersecurity capabilities. Staff
receive regular training to keep their skills up to date and to help
maintain threat awareness.
Liontrust use third party specialists to help define, test and review
our security arrangements at least annually with internal and
external penetration testing happening a number of times a year.
Further work on improving the technology resilience and capacity
is performed following these or as proactively recommended
by the vCISO as functionality and threats evolve. Liontrust have
included certain cybersecurity extensions to our comprehensive
crime insurance policy to provide additional cover in line with a
standard cyber insurance policy.
Charitable Giving
Liontrust’s Sponsorship and Charitable Donations Policy ensures
that all donations, sponsorship and employee/member volunteer
activities align with our corporate social responsibility policy and
business goals. Generally, Liontrust will not make contributions to
certain causes or activities; these include, but are not limited to
the following:
• Political parties;
• Faith related causes, organisations or activities; and
• Where a conflict arises between Liontrust and its Clients.
Charitable donations are normally for small sums of money by way
of single donations with larger or ongoing payments requiring
approval by the Board of Liontrust. Liontrust operates a charity
matching scheme to encourage all employees and members
to personally participate in the voluntary sector. Fundraising or
donations made to registered charities are matched up to the
value of £500 per tax year.
John Ions
Chief Executive
21 June 2022
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LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT GOVERNANCE
Board of Directors
Risk management and internal controls report
Directors’ report
Directors’ responsibility statement
Corporate Governance report
Directors Board Attendance Report
Nomination Committee report
Audit & Risk Committee report
Remuneration report
76
81
84
87
89
94
97
102
106
BOARD OF DIRECTORS
The Board is responsible for organising and directing the affairs
of the Company that: is in the best interests of the shareholders,
meets legal and regulatory requirements and is also consistent
with good corporate governance practices. There is a formal
document setting out the way in which the Board operates,
which is available upon request from the Company Secretary.
The Chair’s main responsibilities are to lead the Board, ensure
that shareholders are adequately informed with respect to
the Company’s affairs and that there are efficient relations
and communication channels between management, the
Board and shareholders, liaising as necessary with the
Chief Executive on developments, and to ensure that the
Chief Executive and his executive management team have
appropriate objectives and that their performance against
those objectives is reviewed.
The Chief Executive’s main responsibilities are the executive
management of the Group, liaison with the Board and
shareholders (as required by the Chair), to manage the
strategy of the Group, to manage the senior management
team, oversee and manage the sales and marketing teams,
and to be an innovator and facilitator of change. The Chief
Executive discharges his responsibilities in relation to the
executive management of the Group via two partnership
management committees.
CHAIR
Alastair Barbour
Non-Executive Chair
Joined the Board in April 2011 and appointed Non-Executive
Chair on 20 September 2019.
Committees: Chair of the Nomination Committee. Alastair is a
chartered accountant with 25 years’ experience spent auditing
and advising boards and management of public companies in
the UK and internationally, principally in the financial services
industry. He trained with Peat, Marwick, Mitchell & Co in
London before being admitted as a partner with KPMG in
Bermuda in 1985. Alastair returned to the UK as a partner
of KPMG in 1991 and has specialised in financial services
with extensive experience in advising on accounting, financial
reporting and corporate governance.
Other directorships and commitments: Director of Phoenix
Group Holdings plc and Senior Independent Director of The
Bank of N.T. Butterfield & Son Limited.
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LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE EXECUTIVE DIRECTORS
John Ions
Chief Executive
Vinay Abrol
Chief Operating Officer and Chief Financial Officer
Joined the Board in May 2011.
Joined the Board in September 2004.
Prior to joining Liontrust in February 2010, John was Chief
Executive of Tactica Fund Management since it was established
in 2005. Previously, John was Joint Managing Director of SG
Asset Management and Chief Executive of Société Generale
Unit Trusts Limited, having been a co-founder of the business
in 1998. John was also formerly Head of Distribution at
Aberdeen Asset Management.
Vinay is responsible for overseeing all finance, information
technology, operations, risk and compliance of the Group.
After obtaining a first-class degree in computing science from
Imperial College London, Vinay worked for W.I. Carr (UK)
Limited specialising in the development of equity trading
systems for their Far East subsidiaries, and then at HSBC Asset
Management (Europe) Limited where he was responsible for
global mutual funds systems. Following a short period at S.G.
Warburg and Co., he joined Liontrust in 1995.
77
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE NON-EXECUTIVE DIRECTORS
Mandy Donald
Non-executive Director
Emma Howard Boyd CBE
Non-executive Director
Joined the Board in October 2019.
Joined the Board in January 2022.
Committees: Chair of the Audit & Risk Committee and member
of the Nomination Committee.
Committees: Remuneration Committee
Mandy has board experience in both complex organisations
and early stage environments, and brings a background
of strategic planning and operational management to the
Company. A chartered accountant by training, she spent 18
years with EY before steering her focus towards the growth
of new companies, serving on the boards of a diverse range
of start-up businesses. Mandy holds a Financial Times Non-
Executive Diploma with a focus in corporate governance.
Other directorships and commitments: Trustee of The Institute
of Cancer Research, where she is also Chair of the Audit
Committee, she is also a Non-executive Director and Chair of
the Audit Committee of Punter Southall Group; and is a Non-
executive Director of Gowling WLG LLP and JP Morgan US
Smaller Companies Investment Trust PLC.
Emma brings extensive commercial and financial services
experience to the Board, as well as a background in sustainable
finance and stewardship. She has held a number of non‐
executive and advisory roles over the past eight years since
leaving Jupiter Asset Management as Director, Stewardship.
Other directorships and commitments: Chair of the Environment
Agency, an Ex officio board member of the Department for
Environment, Food and Rural Affairs and interim Chair of the
Green Finance Institute, Adviser to the Board of Trade. Emma
also serves on several boards and advisory committees which
include: The Coalition for Climate Resilient Investment (co-Chair),
The European Climate Foundation, The Council for Sustainable
Business, The Prince’s Accounting for Sustainability Project and
Menhaden Resource Efficiency Plc.
78
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE Quintin Price
Non-executive Director
Rebecca Shelley
Senior Independent Director
Joined the Board in July 2021.
Joined the Board in November 2021.
Committees: Nomination, Audit & Risk and Remuneration
Committees.
Committees: Nomination, Audit & Risk and Remuneration
Committees.
Quintin has 30 years’ experience of working at a senior level
for a number of leading investment companies. From 2005 to
2015, he worked at BlackRock where he was Head of Alpha
Strategies and a member of the Global Executive Committee.
Quintin holds a BSc. in Economic & Social History from the
University of Bristol.
Other directorships and commitments: Non-executive Director
of Aperture Investors LLC, a New York based fund manager,
and F&C Investment Trust Plc, and a member of the Investment
Committee of the Leverhulme Trust.
Having been Investor Relations and Corporate Communications
Director at Norwich Union plc from 1998-2000, Rebecca
moved to Prudential plc in 2000, starting as Investor Relations
Director, and then became Group Communications Director
with a seat on their Group Executive Committee. From 2012
to 2016, Rebecca was the Group Communications Director
of Tesco plc and a member of their Executive Committee.
During this time, she held positions on the board of the British
Retail Consortium and was a trustee of the Institute of Grocery
Distribution. Most recently Rebecca spent three years at TP
ICAP plc as Group Corporate Affairs Director and was a
member of their Global Executive Committee.
Other directorships and commitments: Non-executive Director
at Sabre Insurance Group Plc and Hilton Food Group Plc.
79
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE George Yeandle
Non-executive Director
Joined the Board in January 2015.
Committees: Chair of the Remuneration Committee, member of
the Nomination and Audit & Risk Committees.
George is a chartered accountant with over 30 years’
experience having specialised throughout most of his career
in advising clients on executive pay and remuneration issues.
He has also held a number of internal leadership roles. He
trained with Coopers & Lybrand (now PricewaterhouseCoopers
LLP) before being admitted as a partner in 1989. More
recently, George was Operational Leader of the London Region
Human Resource Services Business and a Senior Partner of
PricewaterhouseCoopers LLP, retiring in December 2013.
DETAILS OF THE BOARD’S
RESPONSIBILITIES CAN BE
FOUND ON PAGE 87
80
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE
RISK MANAGEMENT AND
INTERNAL CONTROLS REPORT
The Board is ultimately responsible for determining the risk
appetite, risk strategy and risk management framework of
the Group. The FCA have noted that it is for each individual
firm to determine, based on its nature, scale and complexity,
as well as its attitude to exposure to risk, whether or not to
establish a Risk Committee of the governing body. The Group
has determined not to establish a separate Risk Committee
but to combine it with the Audit Committee, although this is
reviewed on an annual basis.
The Audit & Risk Committee, on behalf of the Board, is
accountable for, and responsible for, overseeing the Group’s
financial reporting, risk management and system of internal
controls, including suitable monitoring procedures, which
are designed to provide reasonable, but not absolute,
assurance against material misstatement or loss. The Audit &
Risk Committee, on behalf of the Board, is also responsible
for keeping under review the scope, results, fees and the
independence of the external auditors.
Edward Catton, Chief Risk Officer, is responsible for
overseeing all risk management of the Group and monitors
the Group’s risks in a pro-active manner, with all departments
fully aware of and managing the key risks appropriate to their
responsibilities. All material risks to the business are monitored,
appropriate mitigations for each risk are recorded and
identified to the Board with markers for those with increased
risk levels. Management recognise the importance of risk
management and view risk management as an integral part of
the management process which is tied into the business model
and is described further in the Principal risks and mitigations
section of the Strategic Report on pages 42 to 51.
Committee structure and delegation of powers
The Corporate Governance report on page 89 details the
Board’s and the Chief Executive’s responsibilities for organising
and directing the affairs of the Company. The Board has
delegated a number of its powers to three subcommittees; the
Audit & Risk Committee, the Nomination Committee and the
Remuneration Committee.
Fig 1: Board and Sub-Committees
Liontrust Asset Management Plc
Main Board
Sub-Committees
Audit & Risk
Committee
Nomination
Committee
Remuneration
Committee
The Board has delegated the authority for the executive
management of the Group to the Chief Executive except where
any decision or action requires approval as a Reserved Matter
in accordance with the Schedule of Matters Reserved for the
Board. The Group have set up two management committees
to assist the Chief Executive, namely the:
a) Liontrust Fund Partners LLP Partnership Management
Committee
(“LFPPM”) for retail and institutional sales and marketing,
advertising, promotion of Liontrust Funds, Transfer Agency,
Information Technology (including business continuity), Treating
Customers Fairly, Compliance & Financial Crime, Human
Resources, Finance, product development and other asset
gathering related powers; and the
81
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE b) Liontrust Investment Partners LLP Partnership Management
Committee
(“LIPPM”) for fund management, dealing, trading systems,
research tools (including fund management data services),
investment operations, risk management (including portfolio
risk), and investment processes (including performance of
the process, outlook, amendments or enhancements to the
investment processes and new instruments within funds).
Fig 2: Board and Management committees and sub-committees
Partnership Management Committee Meetings are held
regularly over the course of a financial year.
There are several sub-committees of the Partnership meetings
that have been set up to help govern and manage the business..
Matters reserved
for the board
Liontrust Asset Management Plc
Main Board
Partnership Management Committees
Liontrust Fund
Partners LLP
Liontrust Investment
Partners LLP
Sub-Committees
All other powers of
general management
Treating
Customers Fairly
Committee
Financial Crime
Committee
Portfolio Risk
Committee
Health and
Safety
Committee
Client Assets
Committee
Distribution
and Products
Committee
Technology
Committee
Stewardship and
Sustainability
Committee
Diversity and
Inclusion
Committee
Workforce
Advisory
Committee
Fund
Management
Committee
Operations
and Outsource
Oversight
Committee
82
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE Sub-committee
Overview
Sustainability & Stewardship Committee The Committee is responsible for developing and implementing our Group Sustainability strategy and
environmental, social and governance (ESG) initiatives.
Diversity & Inclusion Committee
Workforce Advisory Committee
Fund Management Committee
This Committee will look at issues such as how we prevent and eliminate discrimination, including
unconscious bias, raise awareness of the importance and benefits of diversity, enhance our culture,
ensure policies and procedures promote diversity across the company, and increase awareness
through training, mentoring and coaching.
The purpose of this Committee is to advise the Management Committees and the Board on issues
relating to the workforce, ensuring all colleagues have the skills, motivation and opportunity to
develop and grow. This Committee has representatives from across the business including two
members of the Management Committee.
The Committee coordinates the activities of each of the fund management teams with trading,
operations, risk and compliance and helps to ensure change, governance and regulatory issues are
communicated effectively throughout the business
Operations and Outsource Oversight
Committee
The Committee provides regular oversight and monitoring of our outsource providers and key
counterparties to ensure they continue to provide a high level of service to the Group.
Treating Customers Fairly Committee
Financial Crime Prevention Committee
Portfolio Risk Committee
Client Assets Committee
Technology Committee
Distribution & Product Committee
Health & Safety Committee
The Treating Customers Fairly Committee (“TCFC”) oversees the management of the Group’s Treating
Customers Fairly initiatives throughout the business, reviewing the suitability of products for clients
and monitoring customer outcomes. The TCFC agrees and monitors the Group’s approach to clients
and how our responsibilities are discharged. It keeps track of any regulatory developments and
also manages the training programmes. The core to the TCFC’s work is the management of our TCF
programme in relation to the six outcomes that the FCA has set out for the industry. This work includes
an ongoing assessment of our business against those outcomes with any actions tracked accordingly
The Financial Crime Prevention Committee (“FCPC”) oversees the effectiveness, scope and
performance of the procedures throughout the business to prevent money laundering (including the
review of any sanctions breaches, review of politically exposed persons and suspicious activity
reports), fraud including excessive or inappropriate gifts and entertainment given and received,
cybersecurity and anti-bribery and corruption policies and procedures within Liontrust including the
due diligence of third parties
The Portfolio Risk Committee (“PRC”) oversees the management of portfolio risk throughout the business.
This oversight encompasses portfolio risk management systems and operations together with the
monitoring of portfolio risk investment restrictions. The PRC has documented the approach to risk
management in the Risk Management Process document (“RMP”). The PRC also monitors portfolio
performance and investment processes, establishing parameters for exception reporting and ensuring
that appropriate client communications are prepared, as necessary. The Portfolio Risk Committee
ensures that investment teams have appropriate risk processes in place and that each fund has an
agreed risk profile which details all the monitored risk controls and the risk limits for each fund
The Client Asset Committee (“CAC”) is responsible for how client money and assets are held by the
Group or its outsourced providers. Identifying all client assets, the controls and procedures in place
for handling client assets and identifying, managing and monitoring the risks to keep the money and
assets as safe as possible in all circumstances
The Technology Committee (“TC”) is responsible for monitoring and oversight of Technology and
Cyber Security across the Company. The Committee is responsible for ensuring the systems employed
by the company are fit for purpose.
The Distribution and Product Committee (“DPC”) is responsible for product development, governance
and strategy, distribution strategy and marketing strategy. The DPC reviews new product proposals
and other proposals for material changes to existing products.
The Health and Safety Committee (“HSC”) is responsible for all health and safety matters for the
Group including the health and safety policy statement, any required health and safety related risk
assessments for the Group, the first aid requirements, all fire safety and emergency procedures, the
environmental policy and any other matters relating to the general health and safety requirements of
the Group’s staff.
83
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE DIRECTORS’ REPORT
The Directors present their report and the audited consolidated financial statements of Liontrust Asset Management PLC for the
year ended 31 March 2022.
Principal activities
Liontrust Asset Management PLC is a holding company whose shares are quoted on the Official List of the London Stock Exchange
and is domiciled and incorporated in the UK. It has five operating subsidiaries as follows:
Subsidiary name
Liontrust Fund Partners LLP
Liontrust Investment Partners LLP
% owned by
the Company
Subsidiary principal activities
100%
100%
A financial services organisation managing unit trusts, authorised and regulated
by the Financial Conduct Authority.
A financial services organisation offering investment management services
to professional investors directly, through investment consultants and through
other professional advisers, which is authorised and regulated by the Financial
Conduct Authority. Liontrust Investment Partners LLP is also approved as an
Investment Manager by the Central Bank of Ireland.
Liontrust International (Luxembourg) S.A.
100%
A Distribution business authorised and regulated by the CSSF
Liontrust Portfolio Management Limited
100%
A financial services organisation offering investment management services
to professional investors directly, through investment consultants and through
other professional advisers, which is authorised and regulated by the Financial
Conduct Authority. Formerly Majedie Asset Management Limited, acquired on 1
April 2022.
In addition to the principal operating subsidiaries listed
above, Liontrust Asset Management PLC has the following
other 100% owned subsidiaries: Liontrust Investment Funds
Limited and Liontrust Investment Services Limited which
act as the corporate member in Liontrust Fund Partners LLP
and Liontrust Investment Partners LLP respectively Liontrust
Investment Management Limited, acquisition of the Architas
business which are Liontrust Advisory Services Limited and
Liontrust Multi–Asset Limited.
Results and dividends
Profit before tax was £79.3 million (2021: £59.0 million).
Adjusted profit before tax was £96.6 million (2021: £59.0
million – restated) after adding back expenses including,
severance compensation and related legal costs, acquisitions
related costs, professional services (restructuring, acquisition
related and other) and intangible asset amortisation, and
is reconciled to profit before tax in note 7 to the financial
statements.
The Directors declare a second interim dividend of 50 pence
per share (2021: 36 pence per share). This results in total
dividends of 72 pence per share for the financial year ending
31 March 2022 (2021: 47 pence per share).
Review of the business and future developments
A review of the business and future developments is set out in
the Chair’s statement, Chief Executive’s report and Strategic
Report on page 12 and 10 to 74 respectively.
Directors
The Directors of the Company during the year and up to
the date of the signing of the financial statements were as
follows. Their interests in the share capital of the Company
at 31 March 2022 are set out in the Remuneration report on
page 126.
Vinay Abrol
Alastair Barbour
Mike Bishop (retired 23 September 2021)
Mandy Donald
Emma Howard Boyd CBE (appointed 19 January 2022)
John Ions
Quintin Price (appointed 1 July 2021)
Rebecca Shelley (appointed 1 November 2021)
Sophia Tickell (resigned 23 September 2021)
George Yeandle
84
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE
Disclosure required under the Listing Rules and Disclosure Guidance and Transparency rules
LR 4.1.5.(R) and DTR 4.1.8 R
Information which is the required content of the management report can be found in the Strategic Report and in this Directors’
Report.
LR 9.8.4R / DTR 7.2
The following table is disclosed pursuant to Listing Rule 9.8.4R and DTR 7.2. The information required to be disclosed, where
applicable to the Company, can be located in these Annual Report and Financial Statements at the references set out below:
Information required
Interest capitalised
Shareholder waiver of dividends
Shareholder waiver of future dividends
Location
Not applicable
Note 23
Note 23
Agreements with controlling shareholders
Not applicable
Provision of services by a controlling shareholder
Not applicable
Key contracts
Risk Management and Internal Controls Report
Details of long-term incentive schemes
Remuneration report
Waiver of emoluments by a Director
Not applicable
Waiver of future emoluments by a Director
Not applicable
Non-pre-emptive issues of equity
for cash
Allotment of 193,204 fully paid ordinary shares of 1p each under the terms of the
Liontrust Long-Term Incentive Plan.
Non-pre-emptive issues of equity for cash in relation
to major subsidiary
Not applicable
Participation by parent of a placing by a listed
subsidiary
Not applicable
Corporate Governance code and practices applied
Corporate Governance report
(DTR7.2.2 DTR7.2.3)
Main features of the internal control and risk
Risk Management and Internal Controls report
management systems (DTR7.2.5)
Significant shareholders, rights, voting, appointment of
Corporate Governance report, Directors’ report
directors, significant agreements (DTR 7.2.6)
Administrative, Management and Supervisory Bodies
Risk Management and Internal Controls report
and their Committees (DTR 7.2.7)
All the information cross referenced above is incorporated by
reference into this Directors’ Report.
DTR 7.2 Structure of capital and voting rights
As at 31 March 2022, there were 61,252,164 fully paid
ordinary shares of 1p amounting to £612,522. As at 22 June
2022 there were 64,935,384 fully paid ordinary shares of
1p amounting to £649,538. Each share in issue is listed on
the Official List maintained by the FCA in its capacity as the
UK Listing Authority.
The Company has one class of ordinary shares which carry
the right to attend, speak and vote at general meetings of the
Company. The holders of ordinary shares have the right to
participate in dividends and other distributions according to
their respective rights and interests in the profits of the Company
and a return of capital on a winding-up of the Company. Full
details regarding the exercise of voting rights in respect of the
resolutions to be considered at the Annual General Meeting to
be held on 22 September 2022 are set out in the Notice of
Annual General Meeting.
On 1 April 2022 the Company issued 3,683,220 fully paid
ordinary shares of 1p pursuant to its acquisition of Majedie
Asset Management Limited.,
To be valid, the appointment of a proxy to vote at a general
meeting must be received not less than 48 hours before the time
appointed for holding the meeting. None of the ordinary shares
carries any special rights with regard to control of the Company.
85
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE Under Resolution 17 of the Annual General Meeting held on 23
September 2021, the shareholders authorised the Company to
purchase its own shares pursuant to section 701 of the Companies
Act 2006. This authority is limited to the maximum number of
6,125,216 Ordinary shares of 1 pence each (equivalent to
approximately ten per cent of the issued share capital of the
Company). This authority expires at this year’s Annual General
Meeting of the Company or 22 December 2022 (whichever is
the earlier). The maximum price that may be paid for an Ordinary
share will be the amount that is equal to 5 per cent above the
average of the middle market prices shown in quotations for an
Ordinary share in the London Stock Exchange Daily Official
List for the five business days immediately preceding the day
on which that Ordinary share is purchased. The minimum price
which may be paid for an Ordinary share is 1 pence.
Corporate governance
A report on corporate governance appears on pages 89 to
96, which forms part of this Directors’ report..
Risks and uncertainties
A report on principal risks and how they are managed appears
in the Strategic Report on pages 10 to 74 and a report on
the risk management and internal controls appear on pages
81 to 83.
Corporate social responsibility
Liontrust aims to be recognised as an organisation that is
transparent and ethical in all its dealings as well as making
a positive contribution to the community in which it operates.
The Board recognises the Group’s impact, responsibilities and
obligations on and towards society and aims to promote equal
opportunities and human rights, reduce environmental risk and
operate in a sustainable manner.
The Group is committed to the highest standards of business
conduct. Policies and procedures are in place to facilitate the
reporting of suspect and fraudulent activities, including money
laundering and anti-bribery policies.
The Group’s health and safety policy aims, insofar as it is
reasonably practical, to ensure the health and safety of all
employees and other persons who may be affected by the
Group’s operations and provide a safe and healthy working
environment. The Group has a good record of safety.
A report on Our People, Sustainability and Our Corporate
Responsibilities can be found on Pages 52 to 74.
Employees
The Group gives fair consideration to any application for
employment from disabled persons, where the person can
adequately fulfil the job’s requirements. Should any existing
employee become disabled, the Group will aim to ensure,
as far as is practicable, to provide continuing employment
under normal terms and conditions and to provide training
and career development to disabled employees.
Details of Equal Opportunities, Diversity and Inclusion can be
found on page 100.
Financial instruments
The Group’s financial instruments at 31 March 2022
comprise cash and cash equivalents, financial assets and
receivable and payable balances that arise directly from its
daily operations.
Receivables arise principally in respect of fees receivable
on funds under management, cancellations of units in unit
trusts and sales of units in unit trusts, and shares of ICVCs title
to which are not transferred until settlement is received. The
Group’s credit risk is assessed as low.
Financial assets comprise assets held at fair value through
profit or loss.
Assets held at fair value through profit or loss are unit trust
units held in the ‘manager’s box’ to ease the calculation of
daily creations and cancellations, and shares in the sub-funds
of the Liontrust Global Funds Plc.
Payables (excluding deferred income) represent amounts the
Group is due to pay to third parties in the normal course
of business. These include expense accruals as well as
settlement accounts (amounts due to be paid for transactions
undertaken). Trade payables are costs that have been billed,
accruals represent costs, including remuneration, that are not
yet billed or due for payment. They are initially recognised at
fair value and subsequently held at amortised cost.
Cash flow is managed on a daily basis, both to ensure
that sufficient cash is available to meet liabilities and to
maximise the return on surplus cash through use of overnight
and monthly deposits. The Group is not reliant on income
generated from cash deposits.
Liontrust aims to be recognised as an organisation that is transparent and ethical in
all its dealings as well as making a positive contribution to the community in which
it operates.
86
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE Deposit banks are selected on the basis of providing a
reasonable level of interest on cash deposits together with a
strong independent credit rating from a recognised agency.
Any banks selected for holding cash deposits are selected
using a detailed counterparty selection and monitoring policy
which is approved by the Board.
Under company law the directors must not approve the
financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group
and parent Company and of the Group’s profit or loss for
that period. In preparing each of the Group and parent
Company financial statements, the directors are required to:
Based on holding the financial instruments as noted above the
Group does not feel subject to any significant liquidity risks.
• select suitable accounting policies and then apply them
consistently;
Full details of the Group’s financial risk management can be
found in note 2 on page 150 to 154.
Annual General Meeting
The Annual General Meeting of the Company will be held in
the Pinafore room at the Savoy Hotel, Strand, London, WC2R
0EZ on 22 September 2022 at 2.00 p.m. A notice convening
this meeting will be sent to shareholders in August 2022.
Section 992, Companies Act 2006
The following information is disclosed in accordance with
section 992 of the Companies Act 2006:
• The Company’s capital structure and voting rights are
summarised on page 85.
• Details of the most substantial shareholders in the Company
are listed on page 92.
• The rules concerning the appointment and replacement
of Directors are contained in the Company’s articles of
association and are discussed on page 90.
• There are: no restrictions concerning the transfer of the
securities in the Company; no special rights with the regard
to control attached to securities; no agreement between
holders of the securities regards their transfer known to the
Company; and no agreement which the Company is party
to that might affect its control following a takeover bid.
• There are no agreements between the Company and its
Directors concerning compensation for loss of office as at
31 March 2022.
Statement of Directors’ responsibilities in respect of the
Annual Report and Financial Statements
The directors are responsible for preparing the Annual Report
and the Group and parent Company financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare Group and parent
Company financial statements for each financial year. Under that
law they are required to prepare the Group financial statements in
accordance with UK-adopted international accounting standards
and applicable law and have elected to prepare the parent
Company financial statements on the same basis.
• make judgements and estimates that are reasonable,
relevant and reliable;
• state whether they have been prepared in accordance with
UK-adopted international accounting standards;
• assess the Group and parent Company’s ability to continue
as a going concern, disclosing, as applicable, matters
related to going concern; and
• use the going concern basis of accounting unless they either
intend to liquidate the Group or the parent Company or to
cease operations, or have no realistic alternative but to do so.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the parent
Company’s transactions and disclose with reasonable accuracy
at any time the financial position of the parent Company and
enable them to ensure that its financial statements comply
with the Companies Act 2006. They are responsible for such
internal control as they determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error, and have general
responsibility for taking such steps as are reasonably open to
them to safeguard the assets of the Group and to prevent and
detect fraud and other irregularities.
Under applicable law and regulations, the directors are also
responsible for preparing a Strategic Report, Directors’ Report,
Directors’ Remuneration Report and Corporate Governance
Statement that complies with that law and those regulations.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
company’s website. Legislation in the UK governing the
preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
In accordance with Disclosure Guidance and Transparency
Rule 4.1.14R, the financial statements will form part of the
annual financial report prepared using the single electronic
reporting format under the TD ESEF Regulation. The auditor’s
report on these financial statements provides no assurance
over the ESEF format.
87
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE Responsibility statement of the Directors in respect of the
annual financial report
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the company and the undertakings included in the
consolidation taken as a whole; and
• the strategic report includes a fair review of the development
and performance of the business and the position of the
issuer and the undertakings included in the consolidation
taken as a whole, together with a description of the principal
risks and uncertainties that they face.
We consider the annual report and accounts, taken as a
whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the group’s
position and performance, business model and strategy.
By order of the Board
Vinay Abrol
Chief Operating Officer & Chief Financial Officer
21 June 2022
to
Basis of financial statements
Having given consideration
the uncertainties and
contingencies disclosed in the financial statements, and
also considered the Covid-19 pandemic, the Directors have
satisfied themselves that the Group has adequate resources to
continue in operation for at least 12 months from approval of
the financial statements and they continue to adopt the going
concern basis of accounting in preparing the annual financial
statements.
Independent Auditors
A resolution to reappoint KPMG LLP as auditors to the Company
and to authorise the Directors to fix their remuneration will be
proposed at the 2022 Annual General Meeting.
Political donations
The Group made no political donations or contributions during
the year. (2021: £nil).
By order of the Board
Mark Jackson
Company Secretary
21 June 2022
2Available at www.frc.org.uk/directors/corporate-governance-and-stewardship/uk-corporate-governance-code
88
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE
CORPORATE GOVERNANCE REPORT
Compliance with the provisions of the Code
The Company is committed to the principles of the UK
Corporate Governance Code (July 2018) (the “Code2”).
During the year the Company has applied the main principles
and complied with the provisions of the Code except as noted
below in relation to the tenure of the Chair (see page 97).
there are efficient relations and communication channels
between management, the Board and shareholders, liaising
as necessary with the Chief Executive on developments,
and to ensure that the Chief Executive and his executive
management team have appropriate objectives and that their
performance against those objectives is reviewed.
The Board
The Board is responsible for organising and directing the
affairs of the Company and the Group in a manner that is
in the best interests of the shareholders, meets legal and
regulatory requirements and is also consistent with good
corporate governance practices. There is a formal document
setting out the way in which the Board operates, which is
available upon request from the Company Secretary.
The division of responsibilities between Alastair Barbour,
Chair, and John Ions, Chief Executive, has been clearly
established by way of written role statements, which have been
approved by the Board. The Chair’s main responsibilities are
to lead the Board, ensure that shareholders are adequately
informed with respect to the Company’s affairs and that
The Chief Executive’s main responsibilities are the executive
management of the Group, liaison with the Board and
shareholders (as required by the Chair), to manage the
strategy of the Group, to manage the senior management
team, oversee and manage the sales and marketing teams,
and to be an innovator and facilitator of change. The Chief
Executive discharges his responsibilities in relation to the
executive management of the Group via two partnership
management committees as detailed in the Risk management
and internal controls report on page 81.
The Chair and Chief Executive are responsible to the Board
for the executive management of the Group and for liaising
with the Board and keeping it informed on all material
matters.
The Non-executive Director’s role has the following key elements:
• constructively challenging, and contributing
the
development of the strategy of the Company and the Group;
to,
• scrutinising the executive management team’s performance
in meeting agreed goals and objectives, and monitoring the
reporting of performance to the Board;
• satisfying themselves that financial information is accurate
and that financial controls and risk management systems are
robust and defensible; and
• being responsible for determining appropriate levels of
remuneration for executive directors and a prime role
in appointing (and where necessary removing) senior
management and in succession planning.
89
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE Under the Company’s articles of association, one third
of the Directors must retire from office by rotation at each
Annual General Meeting and may offer themselves for re-
election (this does not include Directors appointed to the
Board since the last Annual General Meeting). Under the
Company’s Corporate Governance Guidelines, which reflect
the provisions of the Code on Corporate Governance, Non-
executive Directors must retire and may offer themselves for
re-election annually once they have served nine or more
years on the Board. The UK Corporate Governance Code
recommends that all Directors of FTSE 350 companies
retire and are put up for re-election at the Annual General
Meeting. The Board considers this to be best practice and,
accordingly, has decided to go beyond the requirements of
the Company’s articles of association and require that all
Directors of the Company retire and offer themselves for re-
election.
achieved between Executive and Non-executive Directors is
appropriate and effective for the control and direction of the
business.
The Chair has met during the year with the Non-executive
Directors both individually and collectively without the other
Executive Directors.
Having duly evaluated each of the Non-executive Directors,
including their length of service, the Board considers that, all
such Directors are independent, in that they neither represent
a major shareholder group nor have any involvement in the
day to day management of the Company or its subsidiaries.
As such they continue to bring objectivity and independent
judgement to the Board and complement the Executive
Directors’ skills, experience and detailed knowledge of the
business.
The Board met seven times during the year. In addition, there
were occasions when the Directors met as a committee of the
Board in order to authorise transactions already agreed in
principle at Board meetings. On those occasions, a quorum
of either two or three Directors was required.
Directors
Biographical details of all current Directors can be found on
page 76.
The Board is committed to the principles of the UK Corporate
Governance Code. During the year the Company has
applied, except where otherwise stated the main principles
and complied with the provisions of the Code. The Chair, is
overseeing succession planning and will bring directors’ tenure
into compliance with the Code over a period of years.
During the year three Non-executive Directors joined the Board;
Quintin Price, Rebecca Shelley and Emma Howard Boyd. The
details of the committees that they have joined are on pages
94–96. The Group engaged with Ridgeway and sapphire
Partners to assist with the search for Non-executive Directors
None of the Executive Directors are on the board of a FTSE
100 company.
Non-executive Directors are aware that they have to report
any change in their circumstances or those of the members
of their families that might lead to the Board reconsidering
whether they are independent. Directors are also aware that
they have to inform the Board of any conflict of interest they
might have in respect of any item of business and absent
themselves from consideration of any such matter.
The Non-executive Directors have disclosed to the Company
Secretary their significant commitments other than their
directorship of the Company and have confirmed that they
are able to meet their respective obligations to the Company.
The Nomination Committee report contains further details
in respect of the time commitments of the Non-executive
Directors.
Directors have the right to have any concerns about the
running of the Company minuted and documented in a
written statement on resignation.
At all times during the year there have been at least four
Non-executive Directors. The Board believes that the balance
The Company has arranged insurance cover in respect of legal
action against its Directors and Officers.
90
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE 91
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE Performance
The Board conducts a formal review and rigorous evaluation of
its own performance and that of its committees. The evaluation
process is constructively used to improve Board effectiveness,
maximise strengths and address any weaknesses.
The Executive Directors have been subject to a formal
performance appraisal. These appraisals were carried out in
2022 and in all cases their performance was appraised as
continuously effective. The performance of the Non-executive
Directors during the year to 31 March 2022 has been reviewed
by the Chair. The review has confirmed that the performance of
the Non-executive Directors is effective and appropriate.
Professional development and training
Every Director is entitled to receive appropriate training and
guidance on their duties and responsibilities. Continuing
professional development is offered to all Directors and the
Board is given guidance and training on new developments,
such as new regulatory requirements.
In order to promote awareness and understanding of the Group’s
operations, the Chair ensures there are additional opportunities
for the Non-executive Directors to meet with senior management
outside of the Board and its committees.
Communication with shareholders
The Chief Executive and Chief Operating Officer & Chief
Financial Officer also have regular meetings with existing and
potential new shareholders.
Each year, in advance of the Company’s AGM we engage
an investor relations company to contact our key shareholders
to seek their voting intentions and to offer further engagement
with our executive and Non-executive Directors. In addition,
we further engage with the major proxy advisor organisations
in order to ensure their voting recommendations are fair and
reasonable and take full account of the published information
available to them through our published financial report and
accounts and our website.
Substantial shareholders
The Company has received notifications in accordance with the
Financial Conduct Authority’s (“FCA”) Disclosure and Transparency
Rule 5.1.2R of the following interests in 3% or more of the voting
rights attaching to the Company’s issued share capital as follows:
As at 31 March 2022
Name
Sandford Deland Asset Management Limited
Blackrock Inc.
Standard Life Aberdeen PLC
Martin Currie
Canaccord Genuity Group Inc.
JP Morgan Asset Management (UK) Limited
Slater Investments Limited
Castlefield Fund Partners Limited
JO Hambro Capital Management Ltd
As at 17 June 2022
Name
Sandford Deland Asset Management Limited
Blackrock Inc.
Standard Life Aberdeen PLC
Martin Currie
Canaccord Genuity Group Inc.
JP Morgan Asset Management (UK) Limited
Slater Investments Limited
Castlefield Fund Partners Limited
JO Hambro Capital Management Ltd
Number ot
voting rights
Percentage ot
voting rights
5,140,000
4,525,481
3,758,331
3,203,000
3,055,620
2,977,795
2,731,714
2,700,000
2,539,164
8.39%
7.39%
6.14%
5.23%
4.99%
4.86%
4.46%
4.41%
4.15%
Number ot
voting rights
Percentage ot
voting rights
5,140,000
4,525,481
3,758,331
3,203,000
3,055,620
2,977,795
2,731,714
2,700,000
2,539,164
8.39%
7.39%
6.14%
5.23%
4.99%
4.86%
4.46%
4.41%
4.15%
92
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE Section 172 (1) statement
The Directors act in good faith to promote the success of the Liontrust Group (the “Group”) for the benefit of its members’ and
our shareholders as a whole and in doing so, have regard (amongst other matters) to the following factors;
the likely consequences of any
decision in the long term
The Board has set a clear strategic objective for the Group and ensures objectives are implemented by
establishing effective governance and practices. The Board and its executives engage with a wide set of
stakeholders, and the Chair, Chief Executive and Chief Operating Officer & Chief Financial Officer attend
meetings with major shareholders on a regular basis. Shareholder interaction allows the Board to discuss
shareholder views on the Group performance against its strategic objectives. The Board is supported by
several key Committees, including Board Committees covering Audit & Risk, Remuneration and Nomination
and business operational and regulatory matters including Compliance, Portfolio Risk and Treating Customers
Fairly The Board and Board Committees ensure ongoing robust governance, oversight and implementation of
the Groups long-term strategy for the benefit of all stakeholders.
Please see the Directors’ Report for further details on shareholder and governance process.
the interests of the Group’s
employees
The Board recognises the importance of ensuring the Group attracts and retains engaged, committed and
talented employees. The Board seeks to continually inform and engage with employees and is committed
to their development and encourages employees to take on responsibility and be accountable for their own
decisions, actions and behaviour.
the need to foster the Group’s
business relationships with
suppliers, customers and others
the impact of the Group’s
operations on the community
and the environment
the desirability of the Group
maintaining a reputation for
high standards of business
conduct, and
the need to act fairly between
members of the Group.
Employees’ within the Group also have the facility to interact with the Board through a Workforce Advisory
Committee which was also established in 2020 and who’s members range from departments throughout the
Group. The Group also has a Social Committee who organises events of interest for all employees and also
provides feedback and information to senior management and the Board.
The Board understands the importance of ensuring employees feel part of the success of the Group and
employees are encouraged to participate in the Group’s Share Incentive Plan.
The Board recognises the Group’s impact on wider stakeholders, including its customers and the community
in which it operates. The Group is committed to the highest standards of business conduct and the Board’s
work with stakeholders is critical to the long-term sustainable success of the Group. The Board acknowledges
the important role that relationships with third parties play for the Group to achieve its strategic objectives.
The Group is committed to procuring work and services from suppliers in an ethically, sustainable and
environmentally sensitive way and seeks to ensure that suppliers follow similar practices. The Group
encourages competition amongst suppliers whilst purchasing is undertaken in a fair an objective manner.
Please see the Directors Report and Sustainability Report for further information.
The Board is committed to contributing to and benefiting wider society. Details of the various programmes can
be found in the Community engagement section of the Strategic Report on page 37.
The Group remains firmly committed to supporting community and environmental projects and the Board
recognises the increasing importance attached to environmental, social and governance (ESG) issues.
The Group is committed to minimising the environmental impact of the Group and improving the Group’s
environmental performance as an integral and fundamental part of the Board’s strategy and operating
methods. The Group is always striving to reduce its commercial waste and to recycle as much of its
commercial waste as possible, with any non-recyclable items being incinerated to produce energy.
The Group is committed to the highest standards of business conduct and ensures robust governance is
in place throughout the Group. The Group has a number of policies in place to ensure good governance
is embedded within the Group. The Group is a participant in many external bodies and associations to
ensure governance and stewardship is a focus throughout the business, these include being a signatory to
the United Nations Principles of Responsible Investing , a voluntary set of guidelines that helps a company
to address social, ethical, environmental and corporate governance issues, Carbon Disclosure Project, an
independent organisation that measures corporate climate change, adhering to the Financial Reporting
Council’s Stewardship Code and Modern Slavery Act, amongst others.
The Board recognise the need to provide a transparent, positive, and collaborative working environment
for all employees and stakeholder groups who interact and work within the Group. The Board seeks to
ensure all employees within the Group have access and the opportunity to continue their ongoing career
and personal development within their roles. The Group has established a working culture of collaboration
and inclusion which supports a talented and diverse workforce. The Group ensures this is delivered through
the Equal Opportunities and Dignity at Work policy, Recruitment policy and by delivering Equality and
Diversity training to raise awareness. The Group also offers an Internship Programme, offering employment
to younger people from diverse backgrounds, where they may not have otherwise had the opportunity to
start their career in the industry. These policies reinforce the Board’s commitment to form an inclusive culture
where the principle of diversity are embedded at all levels, creating a working environment which promotes
inclusion and is free from all forms of discrimination.
For further information, please see the Group’s Annual Report under “Equal Opportunities, Diversity and
Inclusion” in “Our People, Our Impact and Corporate Responsibilities” section.
93
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE Resources
Directors have access to the services and advice of the Company
Secretary, and may take additional independent professional
advice at the Group’s expense in furtherance of their duties.
The terms of reference of the Audit & Risk, Nomination and
Remuneration Committees have been considered by their
members with a view to ensuring they have available adequate
resources to discharge their duties.
Committees
Details of the chair and membership of the Audit & Risk,
Nomination and Remuneration Committees are set out in the
tables below together with details of attendance at meetings.
Share buy backs
At the 2021 Annual General Meeting shareholders gave approval
for the Company to buy back up to 6,125,216 Ordinary shares.
Shareholders have also renewed the Directors’ authority to issue
ordinary shares up to an aggregate nominal value of £61,252.
There have been no share buy-backs in the year.
Annual General Meeting
Notices convening Annual General Meetings are dispatched
to shareholders at least twenty working days before the relevant
meeting and contain separate resolutions on each issue,
including a resolution to adopt the annual report and financial
statements. At every Annual General Meeting, the Chair of
the Group and the chairs of the Audit & Risk, Nomination and
Remuneration Committees make themselves available to take
questions from shareholders.
The Company has put arrangements in place with its registrars
to ensure that all proxy votes are received and accurately
accounted for. The level of proxies lodged on each resolution,
including votes for, against and abstained, will be available
on the Company’s website or upon request from the Company.
DIRECTORS BOARD ATTENDANCE REPORT
Board & Committee Attendance 2021-2022
BOARD
21.05.21
22.06.21
24.09.21
30.11.21
06.12.21
21.01.22
25.03.22
Total
Date
Director
Vinay Abrol
Alastair Barbour
Mike Bishop1
Mandy Donald
7/7
7/7
2/2
7/7
2/2
7/7
5/5
4/4
2/2
7/7
N/A
N/A
N/A
N/A
N/A
Emma Howard Boyd4
N/A
N/A
N/A
N/A
N/A
John Ions
Quintin Price2
Rebecca Shelley3
Sophia Tickell1
George Yeandle
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
1 Mike Bishop and Sophia Tickell retired from the Board and all Board Committees at the AGM meeting held on the 23.09.2021
2 Quintin Price was appointed as an Independent Non-executive Director on the 1st July 2021.
3 Rebecca Shelley was appointed as an Independent Non-executive Director on 1st November 2021
4 Emma Howard Boyd was appointed as an Independent Non-executive Director on 19th January 2022 but only joined the
Committee after the Board meeting held on the 21st January 2022
94
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE REMUNERATION
Date
Director
Mike Bishop1
Mandy Donald
Emma Howard Boyd4
Quintin Price2
Rebecca Shelley3
Sophia Tickell1
George Yeandle
21.05.21
22.06.21
24.09.21
30.11.21
06.12.21
21.01.22
25.03.22
Total
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
2/2
7/7
1/1
5/5
4/4
2/2
7/7
1 Mike Bishop and Sophia Tickell retired from the Board and all Board Committees at the AGM meeting held on the 23.09.2021
2Quintin Price was appointed as an Independent Non-executive Director on the 1st July 2021.
3Rebecca Shelley was appointed as an Independent Non-executive Director on 1st November 2021
4 Emma Howard Boyd was appointed as an Independent Non-executive Director on 19th January 2022 but only joined the
Committee after the Board meeting held on the 21st January 2022
AUDIT AND RISK
Date
Director
Mandy Donald
Mike Bishop1
Quintin Price2
Rebecca Shelley3
Sophia Tickell1
George Yeandle
20.05.21
21.06.21
23.09.21
29.11.21
20.01.22
Total
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
5/5
2/2
3/3
3/3
2/2
5/5
Emma Howard Boyd4
N/A
N/A
N/A
N/A
1 Mike Bishop and Sophia Tickell retired from the Board and all Board Committees at the AGM meeting held on the 23.09.2021
2Quintin Price was appointed as an Independent Non-executive Director on the 1st July 2021.
3Rebecca Shelley was appointed as an Independent Non-executive Director on 1st November 2021
4 Emma Howard Boyd was appointed as an Independent Non-executive Director on 19th January 2022 but only joined the
Committee after the Board meeting held on the 21st January 2022
95
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE NOMINATION
Date
Director
Alastair Barbour
Mike Bishop1
Mandy Donald
Emma Howard Boyd4
Quintin Price2
Rebecca Shelley3
Sophia Tickell1
George Yeandle
20.05.21
22.06.21
24.09.21
29.11.21
20.01.22
24.03.22
Total
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
6/6
2/2
6/6
1/1
4/4
3/3
2/2
6/6
1 Mike Bishop and Sophia Tickell retired from the Board and all Board Committees at the AGM meeting held on the 23.09.2021
2Quintin Price was appointed as an Independent Non-executive Director on the 1st July 2021.
3Rebecca Shelley was appointed as an Independent Non-executive Director on 1st November 2021
4 Emma Howard Boyd was appointed as an Independent Non-executive Director on 19th January 2022 but only joined the
Committee after the Board meeting held on the 21st January 2022
96
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE NOMINATION COMMITTEE REPORT
Introduction by the Chair of the Nomination Committee
Dear shareholder,
On behalf of the Nomination Committee (the “Committee”), I am pleased to present my first Nomination Committee report for
financial year ended 31 March 2022.
This introduction is intended to provide a summary of the key events during the year from a Committee perspective and to give
further insight into the workings of the Committee and its approach. During the year, the Board’s diversity, structure, size and
composition remained a major focus leading to the recruitment of Quintin Price, Rebecca Shelley and Emma Howard Boyd as
new Non-executive Directors.
DIVERSITY & INCLUSION
The Committee considers diversity, including gender and ethnic diversity, when looking to appoint additional Directors and as
detailed in last year’s Nomination Committee report we initiated a search for an additional Non-executive Director and to use
that opportunity to introduce further diversity. I am very pleased to report that our search was successful with Rebecca Shelley and
Emma Howard Boyd joining the Board during the year.
We established a Diversity & Inclusion Committee (‘D&I Committee’) in April 2021 with membership of this committee coming from
throughout our business. This committee meets monthly, under the Chairship of Vinay Abrol, our Chief Financial Officer & Chief
Operating Officer, who reports back regularly on its recommendations to this Committee and to the Board. As well as initiating a
diversity, inclusion and equality audit with a leading external provider of such services, the D&I Committee held a panel discussion
webinar to coincide with International Women’s Day on “Breaking the Bias” and also a Women’s networking event, which we
aim to hold on a semi-annual basis.
The Committee also notes the recent FCA Policy Statement to boost disclosure of diversity on listed company board and executive
committees, which will apply for accounting periods starting from 1 April 2022, The targets are:
• At least 40% of the board are women;
• At least one of the senior board positions (Chair, Chief Executive Officer (CEO), Senior Independent Director (SID) or Chief
Financial Officer (CFO)) is a woman; and
• At least one member of the board is from a minority ethnic background (which is defined by reference to categories recommended
by the Office for National Statistics (ONS)) excluding those listed, by the ONS, as coming from a White ethnic background)
and is considering how best to meet the targets proposed.
The Committee notes that as at 31 March 2022, the Company already meets two out of the three targets, and will consider how
best to achieve full compliance.
RECRUITMENT
Last year was a year of change for the Board with Mike Bishop and Sophia Tickell leaving from the Board and three new Non-
executive Directors joining the Board: Quintin Price, Rebecca Shelley, and Emma Howard Boyd.
Following these changes we reviewed and rebalanced the membership of the Board’s committees and [responsibilities] of
individual directors.
FOCUS FOR NEXT YEAR
We will continue to focus on diversity and succession planning of the Board and the Group, and also on equality, inclusion and
talent-management in the financial year ending 31 March 2023.
Alastair Barbour
Chair of the Nomination Committee
21 June 2022
97
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE Principle duties
The Committee’s principal duties are as follows:
• regularly review the structure, size and composition (including
the skills, knowledge, diversity and experience) required
of the Board compared to its current position and make
recommendations to the Board with regard to any changes;
• give full consideration to succession planning for directors
and other senior executives; and oversee the development
of a diverse pipeline for succession, taking into account the
challenges and opportunities facing the company, and what
skills and expertise are therefore needed on the Board in the
future;
• be responsible for identifying and nominating for the
approval of the Board, candidates to fill Board vacancies as
and when they arise;
• keep up to date and fully informed about strategic issues and
commercial changes affecting the Company and the market
in which it operates;
• review annually the time required from Non-executive
Directors. Complete performance evaluations to assess
whether the Non-executive Directors have sufficient time to
fulfil their duties;
• approve regularly reports from the HR Director on HR related
matters and management information and to review the
policy on diversity and inclusion, its objectives and linkage to
Company strategy and its implementation and progression;
• review the membership of the Audit & Risk and Remuneration
Committees, in consultation with the Chair of those
committees; and
• annually review the schedule of employees and members
who fall within the remit of the Senior Managers and
Certification Regime (“SMCR”), ensuring appropriate systems
and controls are in place to effectively manage and assess
the ongoing fitness and propriety of those captured by the
Regime, in particular directors and other senior executives.
The terms of reference of the Committee, which explains its role and
the authority delegated to it by the Directors, are available on the
Company’s website or upon request from the Company Secretary.
The terms and conditions of appointment of the Directors will be
available for inspection at the 2022 Annual General Meeting.
Composition and attendance
During the year, the Committee comprised of the Non-executive
Chair and the independent Non-executive Directors:
• Alastair Barbour (Chair)
• Mike Bishop (retired 23 September 2021)
• Mandy Donald
• Emma Howard Boyd CBE (joined 19 January 2022)
• Quintin Price (joined 1 July 2021)
• Rebecca Shelley (joined 1 November 2021)
• Sophia Tickell (resigned 23 September 2021)
• George Yeandle
The attendance record of members of the Committee during
the year is shown in the table on page 94.
Activities during the year
In the financial year ended 31 March 2022, the Committee
met five times and its activities included, amongst other things:
• recruitment of Quintin Price as a Non-executive Director, the
recruitment process was supported by Ridgeway Partners;
• recruitment of Rebecca Shelley as a Non-executive Director,
the recruitment process was supported by Sapphire Partners;
• recruitment of Emma Howard Boyd as a Non-executive
Director, the recruitment process was supported by Sapphire
Partners;
• considered the independence of the Non-executive Directors;
• an annual evaluation of the performance of the Board and its
committees and individual directors;
• an assessment of time available to commit to the Company’s
affairs by its Non-executive Directors;
• received updates and reviewed reports on succession
planning including size, structure and leadership of the
Committees / Board and organisational capability;
• defined the scope of and reviewed the Board Diversity Policy;
• reviewed papers on diversity and inclusion within the business
including reviewing an analysis of diversity (gender and
ethnicity) in the recruitment process;
• supported management in the establishment of a Diversity
& Inclusion Committee chaired by an Executive Director
with membership drawn from all employees and members;
received and discussed regular updates on the Committee’s
activities.
• developed and considered a Board Skills Matrix;
• consideration of further training for the Non-executive Directors,
including a focus on climate change and cyber security;
• reviewed reports on the implementation of the SMCR regime
and its operation including those holding Senior Management
roles and those other employees holding Certification roles;
• Supported management in the development of coaching and
training for the senior leadership team;
• Approved Rebecca Shelley to be appointed as Senior
Independent Director;
• In May 2021 nominated Mandy Donald as the Non-
executive Director employee overseeing employee and
member engagement and in January 2022 nominated Emma
Howard Boyd as the Non-executive Director responsible for
overseeing the Company’s policies and practices in respect
of ESG, both on behalf of the Board;
• Supported management on the review and development of
benefits offered to employees and partners; and
• Reviewed Committee membership of the Non-executive
Directors.
• The Committee received information and support from the
Chief Executive, and the Chief Financial Officer & Chief
Operating Officer during the year in order to enable the
Committee to carry out its duties and responsibilities
effectively. The Committee has the right to appoint external
recruitment consultants or external advisers to fill vacancies
where it believes that to be appropriate;
98
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE Board split and Tenure
Non-executive/Executive split
Board split between Executive and Non-executive Directors
remains unchanged at two Executive Director vs five Non-
executive Directors or 38% vs 62% (2021: 29% vs 71%):
Tenure
Tenure of Non-executive Directors (including the Non-executive
Chair) remains well balanced with Non-executive Directors
with less than 3 years, between 3 and 6 years and 6 years
plus tenure spit 67% vs 0% vs 33% respectively (2021: 20%
vs 20% vs 60%):
NON-EXECUTIVE/
EXECUTIVE SPLIT
TENURE
Non-executive Chair (1)
Non-executive Directors (5)
Executive Directors (2)
13%
63%
25%
1–3 years (4)
6+ years (2)
67%
33%
The 2018 UK Corporate Governance Code states that the
chair should not remain in post beyond nine years from the
date of their first appointment to the Board, though this period
can be extended for a limited time, particularly in those cases
where the chair was an existing Non-executive Director on
appointment, to facilitate effective succession planning and
the development of a diverse board. Alastair Barbour, Non-
executive Chair, joined the Board in April 2011 and became
Non-executive Chair in September 2019. Therefore, by the
time of our 2022 Annual General Meeting, Alastair Barbour
will have been Non-executive Chair for 3 years and been a
non-executive member of the Board for a total of almost 11
years. Given due regard to the following:
• recent corporate activity and resultant change/restructuring
from three acquisitions in three years (the acquisitions of
Neptune Investment Management Limited completed in
October 2019, Architas UK Investment Business completed
in October 2020 and Majedie Asset Management Limited
completed in April 2022);
• significant growth in the business in terms of AuMA and
headcount, and the resultant change that brings in scaling up
distribution, marketing and sales; and
• the recent Board changes with Quintin Price, Rebecca
Shelley and Emma Howard Boyd joining in the financial
year ended 31 March 2022 and Mike Bishop and Sophia
Tickell both leaving the Board in the same period.
The Committee and the Board agree that the benefits of
having an experienced and long-serving Non-executive Chair
in Alastair Barbour during a period of continuing significant
change for the business far outweighs the demerits of having
a Non-executive Chair that has been on the Board for over
nine years. The Nomination Committee keeps this matter
under regular review, and at least annually, and will update
shareholders in due course. The Committee is mindful of the
UK Corporate Governance Code’s provision that this should
be for a limited time only. Alastair Barbour recused himself
from these considerations.
99
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE Gender diversity
Gender diversity of the Board is now more balanced with
female directors representing 38% of the Board (2021: 29%):
Ethnic diversity
Ethnic diversity of the Board remains unchanged at one Director
out of eight, or 13%, being non-white British (2021: 14%):
GENDER DIVERSITY
ETHNIC DIVERSITY
Male (5)
Female (3)
63%
38%
White British (7)
Asian British (1)
88%
13%
Diversity & Inclusion
The Committee fully believes in the benefit that diversity brings in terms of broader perspectives, beneficial insight and challenge
to the Board and throughout the Group and is actively seeking to develop and maintain a diverse business in terms of gender,
ethnicity and educational background, including at Board level.
Board diversity
The Committee considers diversity, including gender and
ethnic diversity, when looking to appoint additional Directors
and strives to encourage all the Directors to create an inclusive
culture within the Group in which differences are recognised
and valued. The Committee meets the recommendation of the
Hampton Alexander Review that women represent at least
33% of Board members. The current percentage of women on
the Board is 38% of total Board membership (2021: 29%) and
50% of Non-executive Directors (2021: 40%).
The Committee is also very supportive of the recommendations
of the Parker Review and is committed to maintaining at least
one Board member from a Black, Asian or ethnic minority
background. The Board currently meets this requirement and
has done so since 2004.
It remains a prerequisite that each Director or proposed Director
must have the skills, experience and character to contribute
both individually and as part of the Board, to the effectiveness
of the Board and the success of the Company and Group.
Subject to this overriding principle, the Board believes that
diversity, amongst its members, including gender and ethnic
diversity, is of great value and it is the Board’s policy to give
careful consideration to issues of overall Board balance and
diversity, in making new appointments to the Board. The
Committee will continue to recommend appointments that
increase diversity at Board level if appropriate when Board
vacancies arise.
Diversity & Inclusion Committee
The Committee supported management in the establishment of
the Diversity & Inclusion Committee, which is chaired by Vinay
Abrol, Chief Financial Officer & Chief Operating Officer, and
reporting directly to the Committee and the Board.
The Diversity & Inclusion Committee meets monthly and
comprised of:
• Vinay Abrol (Chair)
• Nana Amofa (Marketing)
• Ruth Chambers (Fund Management)
• Tosin Fawbe (Risk)
• Lisa Lau (Marketing)
• Harriet Parker (Fund Management)
• Edward Tinwell as alternate for Alex Faye who is on
Maternity Leave (Product)
100 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE The Diversity & Inclusion Committee received information and
support from Ross Hadden, HR Director and Lynne Edwards,
HR & Training Consultant in order to enable the committee to
carry out its duties and responsibilities effectively.
Equal opportunities
The Group operates a policy of equal opportunity, details of
which can be found in the Corporate Social Responsibility
section of the Strategic Report.
Employee engagement
The Workforce Advisory Committee (“WAC”) is chaired by
Ross Hadden, HR Director with ten employee and member
representatives from many parts of the Group, The WAC
meets regularly and the chair provides regular updates to the
Management Committees and this Committee. The WAC met
four times during the year.
During the year John Ions, Chief Executive and/or Vinay Abrol,
Chief Financial Officer & Chief Operating Officer, hosted xxx
webinars for all employees and members, to update on how
the business is performing including:
• an update on the acquisition of the Majedie Asset
Management Limited;
• financial results of the Group;
• working from home guidance; and
• other matters.
In addition two all-employee and member pulse surveys were
carried out to get the views of our employees and members.
The WAC acts as the Board’s formal workforce advisory panel.
ESG responsibility at Board level
At the Committee’s January 2022 meeting, Emma Howard
Boyd was nominated as the Non-executive Director responsible
for overseeing the Company’s policy and practices in respect
of ESG matters on behalf of the Board and to engage on ESG
related matters with the relevant areas of Group.
John Ions is the Executive Director with responsibility for ESG matters
(see page 52, Strategic Report – Our People, Sustainability and
Our Corporate Responsibilities for further information).
Time commitment
Alongside the Board and Evaluation Review (see below) the
Committee reviewed the time required of Non-executive
Directors to discharge their responsibilities. The Committee noted
that Alastair Barbour, on account of his being on the boards of
three public companies and chairing the Audit Committee for
two of them, had provided an analysis of his work commitments,
which shows the level of time commitment required for his other
roles and the complimentary nature of his roles and the time he
has and plans to commit to Liontrust. The Committee confirms
its satisfaction with the time and overall commitment given to
Liontrust by Alastair Barbour and his time availability to act as
Non-executive Chair.
Board and Committee Evaluation
Constal Limited (“Constal”) again carried out an independent
evaluation of the Board and its committees, to review progress
since last year and evaluate the performance of the Board, its
Committees and the individual directors.
As they did last year, Constal’s approach was to take stock of
progress since the last Board review and to consider:
(i) what to focus on to take the Board to the next level; and
(ii) how the Board can best help executive management attain
those ambitions in a way that ensures long-term sustainable
success for stakeholders.
The review was based on confidential interviews with all the
members of the Board and the Company Secretary. Through
interviews Constal asked participants to reflect on various
aspects of the Board and its committees, including the quality
of debate and decision-making, the information they receive,
how well Board discussion time is spent, how the committees
are working, how to achieve and manage the aims for Group
and how the Board might have to adapt to make sure it is best
prepared to meet those challenges.
The key recommendations from the development plan, which
have been adopted by the Board, are:
• continue to develop process for setting strategy and goals
ensuring sufficient time to consider options;
• allocating sufficient time for debate on contentious or
challenging issues;
• focus on improving and enhancing Board and Committee
papers and reports;
• earlier Board
involvement and discussion on M&A
opportunities; and
• allocating sufficient Board or committee time over the year
to discuss and drive progress around issues including
diversity, return to work policies, succession planning, and
remuneration policies.
Alastair Barbour
Chair of the Nomination Committee
21 June 2022
101
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE AUDIT & RISK COMMITTEE REPORT
Introduction by the Chair of the Audit & Risk Committee
Dear shareholder,
On behalf of the Audit & Risk Committee (the “Committee”), I am pleased to present the Audit & Risk Committee report for the
financial year ended 31 March 2022.
The Committee’s key responsibilities remain unchanged during the year and included: assisting the Board in its presentation of
the Group’s financial results; continuing to review the effectiveness the Group’s system of internal controls and risk management
systems; monitor and periodically review the Company’s procedures for ensuring compliance with regulatory and financial
reporting requirements; monitor the effectiveness of internal audit and keep under review the independence and objectivity of the
external auditors.
The terms of reference of the Committee, which explain its role and the authority delegated to it by the Board of Directors, are
published on the Company’s website and are available upon request from the Company Secretary.
I hope that you find this report a useful insight into the work of the Committee and I look forward to meeting with shareholders at
our AGM on xx September 2022.
Mandy Donald
Chair of the Audit & Risk Committee
21 June 2022
Key responsibilities
The Committee’s key responsibilities remain unchanged during
the year and continue to be to:
• review the Group’s arrangements for the deterrence,
detection, prevention and investigation of financial crime,
including whistle blowing arrangements;
• assist the Board in its presentation of the Group’s financial
results and position through review of the interim and full
year financial statements before they are approved by
the Board. The Committee focuses on compliance with
accounting principles and policies, changes in accounting
practice and major matters of judgement;
• keep under review the effectiveness of the risk framework
that is used to monitor the Group’s system of internal controls
and risk management systems. This includes suitable
monitoring procedures for the identification, assessment,
mitigation and management of all risks including liquidity,
market, regulatory, credit, legal, operational and strategic
risks, with particular emphasis on the principal risks faced
by the Group. Such procedures are designed to provide
reasonable, but not absolute, assurance against material
misstatement or loss;
• as part of the suite of risk management procedures, the
Committee reviews and recommends to the Board for
approval, the Group’s Internal Capital Adequacy Assessment
Process (“ICAAP”) to fulfil its regulatory obligations under the
Capital Requirements Directive and assess whether the Pillar 2
assessments and Pillar 3 disclosures remain appropriate;
• monitor and periodically review the Group’s procedures for
ensuring compliance with regulatory and financial reporting
requirements,
relevant
regulatory authorities;
relationship with
including
the
• monitor and review the effectiveness of the Group’s internal audit
function and agree the scope of the internal audit plan; and
• oversee the appointment, performance, remuneration and
independence of the external auditors.
Composition and attendance
During the year, the Committee comprised of independent
Non-executive Directors:
• Mandy Donald
• Quintin Price
• Rebecca Shelley
• Emma Howard Boyd
• Mike Bishop (retired)
• Sophia Tickell (resigned)
• George Yeandle (stepped down 24 March 2022)
The attendance record of members of the Committee during
the year is shown in the table on page 94.
All the Committee’s members who served during the year are
considered by the Board to be appropriately experienced and
sufficiently qualified to fulfil their duties and have competence
relevant to the sector in which the Group operates. The Board
considers Mandy Donald to have recent and relevant financial
experience.
102 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE The Committee members’ profiles are set out in full in the Board
members’ biographies.
The Chief Operating Officer & Chief Financial Officer, Chief
Compliance Officer, Head of Finance and Chief Risk Officer
were regular attendees at the Committee meetings and reported
on their respective areas. The external auditor, KPMG LLP have
attended all Committee meetings and met privately with the
Committee.
An important part of the role of the Committee is to provide non-
executive oversight to ensure management has an appropriate
focus on high quality corporate reporting. In February 2022,
the Group received a letter from the FRC, requesting information
to give them a better understanding of the accounting for
share based payments in our 31 March 2021 annual report.
We provided the information as requested and in the 2022
financial statements have provided additional clarification
where it has been determined appropriate.
Key Activities during the year
The Committee has a formal programme of matters which it
covers during the year. This programme is formulated by the
Committee Chair and the Chief Operating Officer & Chief
Financial Officer and is designed to ensure that all matters that
fall within the Committee’s remit are reviewed during the year.
The Committee has access to external independent advice at
the Company’s expense.
During the financial year to 31 March 2022 and up to the
date of this report, the Committee met 5 times and its activities,
amongst other things, covered the following matters:
• Reviewing the annual financial statements for the year
ended 31 March 2021 and 2022 and half year financial
statements for the six months to 30 September 2021 with
particular emphasis on their fair presentation, challenging
the reasonableness of management’s judgements made and
the valuation of assets and liabilities.
• The appropriateness of the accounting policies used in
drawing up the Group’s financial statements.
• Review and discussion of the Alternative Performance
Measures used in the 31 March 2022 financial statements.
• Consideration of the Group’s taxation requirements.
• Review of the Group’s governance, risk framework, risk
management, risk management processes and related
policies.
• Approval of Enterprise Risk Management framework.
• Review and approval of the Group’s ICAAP and the
work being done to implement the new ICARA and IFPR
requirements.
• Review of the Group’s compliance monitoring programme,
compliance manual (including whistle blowing arrangements)
and annual anti-money laundering report.
• Review and discussion of regular reports on financial
reporting, key risks, compliance, Client Money & Assets
(“CASS”) and financial crime from the Head of Finance,
Chief Risk Officer and Chief Compliance Officer respectively.
• Review and consideration of the external auditors’ reports
on Client Money & Assets.
• Consideration of the external auditors’ report on the financial
year ending 31 March 2021 audit and discussion of their
findings with them.
• Consideration of points raised by the FRC and approval of
managements responses to them
• Review of the internal audit plan in the context of the Company’s
overall risk management programme detailed above.
• Review of Covid-19 operational plans and impact on the
business.
• Reviewed and discussed the findings of 9 internal audit reports,
ensuring appropriate follow up by management of points raised.
These internal audit areas included: Systems and Controls,
Compliance, Front Office and Trading Teams, Regulatory
Reporting, Share Schemes, Operational Resilience, Competition,
Stewardship Code, Distribution Procedural Review
• Approval of the external audit plan for 2022.
• Assessment of
the performance,
independence and
objectivity of the external auditors, concluding that the
Committee was satisfied with the quality and effectiveness
of the audit; and noting that the auditors had appropriately
challenged management’s assumptions and estimates.
• Review and approval of all non-audit services to be carried
out by the external auditors.
• Review of the Committee’s terms of reference.
• Review of the suspension of Liontrust Russia fund.
• Review of ESG reporting and metrics.
Significant accounting matters
Share based payments
Share based payments are a focus for the Committee in view
of the complexity of accounting, interpretation of the reporting
standard and valuation of awards. This also included reviewing
the prior year adjustment in respect of share based payments.
The Committee receives information and explanations from
management which is discussed with them and with the
auditors, taking into account the results of the auditors’ work.
This does not give rise to any material estimates or judgements.
Taxation
The Committee receives regular reports on taxation and deferred
tax amounts including information on positions proposed by
management where tax regulation is subject to interpretation
and the support for provisions established for amounts expected
to be paid. These are discussed with the external auditors and
the results of their reviews and audit are taken into account. This
does not give rise to significant estimates or judgements.
103
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE Acquisitions
Accounting for acquisitions are considered by the Committee,
given the complexity of the accounting and the judgmental
nature of assumptions that are taken into account in the
calculation of accounting models in relation to the valuation
of intangible assets, goodwill and review of impairment.
The Committee receives information and explanations from
management which is discussed with them and the external
auditors, taking into account the results of the auditors work.
The acquisition of Majedie Asset Management Limited was
not completed until after the financial year end and, as such,
the Committee has not considered the accounting for this at
the year end.
Internal audit
Minerva Risk Consulting Partnership
(“Minerva”
or “Internal Auditor”) have been appointed to carry out a
programme of internal audit work as set by the Committee and
act as the Group’s internal auditors.
Limited
Minerva have a direct reporting line to the Chair of the
Committee. The Committee believe that using an external firm
will ensure that the internal audit function will be adequately
resourced and staffed by competent individuals and be
independent of the day-to-day activities of the firm whilst still
having appropriate access to a firm’s records.
The Committee and the Internal Auditors have agreed a rolling
three year Internal Audit plan. This includes the following
Audit areas: front office controls; data protection, security and
governance; risk management; significant financial systems;
outsourcing arrangements and CASS. The Internal Auditors will
also perform a full systems and controls review every three years.
The Committee regularly meets with Minerva, with and without
management present, throughout the year to receive updates
and to review its findings.
Each year the Committee considers the scope of the internal
audit plan and the performance of the Internal Auditors prior to
the commencement of the next year’s internal audit programme
to ensure they remain consistent with the Group’s requirements.
Internal Audit Tender
Minerva Risk Consulting Partnership Limited had been the
Group’s internal auditor since 2017 and after five years
of service the Group initiated a tender process in the final
quarter of 2021. After an initial selection of five firms, the
Audit and Risk Committee, in conjunction with management,
drew up a shortlist of three firms, taking into account their
knowledge and experience of Liontrust’s sector and the
appropriate technical capabilities that a successful tender
would require. Following a comprehensive selection process
culminating in presentations to the Committee and careful
scoring and consideration of the participating firms, in
January 2022, the Committee recommended to the Board
that Grant Thornton UK LLP was the most suitable firm to serve
the Group. The new internal audit mandate will commence
on 1 October 2022.
External auditors
Each year the auditors present to the Committee the proposed
scope of their full year audit plan, including their assessment
of the material risks to the Group’s audit and their proposed
materiality levels. The audit partner attends the Committee
meetings. In addition, the Committee met twice with the
external auditors without management present.
Each year, the Committee considers the performance of the
external auditors prior to proposition of a resolution on their
reappointment and remuneration at the Annual General Meeting.
Based on the satisfactory conclusion of the work described
above carried out by the Committee to assess the performance
of the external auditors and safeguard their independence, the
Committee has recommended their reappointment to the Board
and a resolution will be proposed at the 2022 Annual General
Meeting for the reappointment of KPMG as external auditors.
Non-audit services
The Committee has implemented a policy and guidelines
on provision of non-audit services by the external auditors to
safeguard their objectivity and independence. This policy has
been approved by the Board. The policy provides that provision
of certain types of non-audit services are not permitted under
any circumstances (“Prohibited Services”) whilst others allowed
(“Allowed Services”).
Prohibited Services are those where the Committee considers
that the possibilities of a threat to auditor independence is high.
Allowed Services are those considered to have a low threat to
auditor independence. Nonetheless, Allowed Services still need
the Committee’s approval in advance if the expected fee exceeds
£25,000. All services are reviewed and ratified by the Committee.
The policy also sets out certain disclosures the external auditors
must make to the Committee, restrictions on employing the
external auditors’ former employees, partner rotation and the
procedures for approving non-audit services provided by the
auditors. The policy is reviewed regularly and updated to
ensure compliance with all applicable regulations.
During the year, the external auditors were, on a number of
occasions, engaged as advisers. The services provided related
to the regulatory CASS (client money) audits, interim review,
ESG disclosures assurance and work related to the merger
and closure of authorised investment funds. The Committee is
satisfied that the external auditors were best placed to provide
these services because of their familiarity with the relevant areas
of Group’s business and that there are no matters that would
compromise the independence of the external auditors or affect
the performance of their statutory duties.
The Committee receives a regular report setting out the non-
audit services provided by the external auditors during the
year and the fees charged.
Details of fees paid to the auditors can be found in Note 6 of
the financial statements. The non-audit services as identified in
Note 6 have all complied with the policy as detailed above.
104 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE
105
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE REMUNERATION REPORT
Introduction by the Chair of the Remuneration Committee
Dear shareholder,
On behalf of the Remuneration Committee (the “Committee”),
I am pleased to present the Remuneration Report for the year
ended 31 March 2022. This letter is intended to provide
a summary of key events during the year from a Committee
perspective and to give further insight into the workings of
the Committee and its approach. The Annual Report on
Remuneration and this statement will be subject to an advisory
vote at our 2022 Annual General Meeting, to be held on 22
September 2022.
DIRECTORS’ REMUNERATION POLICY
This year marks a transition from our old Directors Remuneration
Policy (“DRP”) to the new DRP. The new DRP, which was
approved by shareholders at a General Meeting (“February
GM”) in February 2022 with 54.1% of votes in favour, is
available on the Company’s website (in the Investor Relations
section) and we have therefore only included the DRP’s
Elements of Reward table for the new DRP in this year’s report.
We have not included the Elements of Reward table for the
old DRP, which is applicable for the financial year ended 31
March 2022, and is available within our Annual Report 2021
on the Company’s website (in the Investors Relations section),
The new DRP is effective from 1 April 2022, and therefore will
be applied for the financial year ending 31 March 2023 and
future financial years.
The Committee acknowledges that the February GM was
called with fourteen not twenty-one days’ notice which caused
some disquiet and commits to this not happening again in the
future. For the avoidance of doubt, any future general meetings
in relation to remuneration will be called with 21 days’ notice.
As stated immediately following the result of the vote at the
February GM on the Company’s new DRP, the Board, and in
particular the Committee, acknowledges and is disappointed
by the outcome. We reiterate, however, that the voting result
from those with whom we discussed the new DRP in detail was
considerably more positive than the overall result, especially
from our ten largest shareholders.
The Committee has since undertaken a detailed analysis
of all the feedback (including from those shareholders who
voted in favour of the new DRP). Whilst there was no single
consistent theme, with shareholders liking or having problems
with different elements of the new DRP, the main concerns
were over the quantum and calibration of performance
metrics. The Committee is committed to implementing the
newly approved DRP in a way that addresses these concerns
whilst being in the best interests of all our shareholders and
other stakeholders.
I have always maintained that although the new DRP is critical
in establishing the framework for Executive Remuneration
the Committee should be judged on how it implements the
new DRP. It is the actual outcome that matters rather than the
theoretical one. In that respect I have set out below how the
old DRP has been implemented and how the new DRP will
be implemented including where changes have been made
either by the Committee exercising its discretion to restrict
pay outcomes and responding to shareholder feedback. Our
guiding principle is that only exceptional, stretch performance
will receive exceptional reward.
IMPLEMENTATION OF THE DRP IN 2022
I remain committed to openness and consultation on
remuneration matters with transparency of performance
metrics and their associated weighted outcomes and how in
turn this affects the annual bonus. We have also provided
full disclosure of the performance conditions on granted LTIP
awards. In addition, it should be recognised that the Company
had again taken no Government or other financial support on
account of the Covid-19 pandemic.
106 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE VARIABLE REMUNERATION FOR 2022
Annual Bonus
The Committee undertook a review of outcome against the
annual bonus metrics, both quantitative and qualitative.
Disclosure of the full weighted outcome for each of the annual
bonus metrics is included in the body of the Remuneration
Report. Where the overall weighted percentage is 75.3%, the
Committee consider that, in the round, the Executive Directors
have had an around target performance for this year, albeit
does note the exceptional performance in terms of Adjusted
Profit before tax, Adjusted Operating Margin and dividend.
Notwithstanding the exceptional progress made in the year
in executing our strategy and the outstanding financial results
the Committee has used its discretion to cap the annual bonus
pool for the Executive Directors at the same level as last year
so annual bonus levels will remain unchanged. This is also
consistent with my letter within the Notice of General Meeting
for the approval of the new DRP.
The cash element of the annual bonus for Executive Directors
is limited to 250% of salary with 69% of the award deferred
into a range of Liontrust Funds for John Ions and 50% deferred
for Vinay Abrol.
The annual bonus payments to the Executive Directors are
made from an aggregate annual bonus allocation pool in
which all employees and members participate; and which is
approved by the Committee each year.
As well as capping the annual bonus award at last year’s levels
in order to satisfy itself further that the amount was appropriate
the Committee referenced that the:
• aggregate annual bonus for all employees and members,
including the Executive Directors, for the financial year ended
31 March 2022 had not increased in percentage terms.
The pool which is capped at 27% of pre-cash annual bonus
Adjusted Profit before tax*, is this year 20.5% of pre-cash
annual bonus Adjusted Profit before tax (2021: 21%);
• annual bonus for the Executive Directors as a percentage
of the aggregate annual bonus pool for all employees and
members (including fund managers) significantly decreased
by 23% this year, at 6.6% for the financial year ended 31
March 2022 (2021: 8.5%), with 4.3% allocated to John
Ions (2021: 5.4%) and 2.3% to Vinay Abrol (2021: 3.1%).
This decrease in the share of the aggregated annual bonus
pool is a direct consequence of the Committee’s decision to
limit the Executive Director annual bonus pool to the same
level as last year meaning the wider workforce received a
greater share of the aggregate annual bonus pool relative to
the Executive Directors when compared with last year; and
• the annual dividend for the year to 31 March 2022 has
increased by 53%.
In summary our wider stakeholders including the entire workforce
and our shareholders received a greater share of the success of
the business this year relative to the Executive Directors.
LTIP
The FY19 LTIP award vested in the period with 99.18% of
awards vesting. See section 3.1 of the Annual Report on
Remuneration for further information.
Fixed remuneration in 2023
The fixed remuneration outcome for the Executive Directors
for the year ending 31 March 2023 can be summarised as
follows:
• The salary for John Ions and Vinay Abrol increase to
£550,000 and £420,000 respectively for the financial
year ending 31 March 2023, in accordance with the new
DRP. There was general agreement from the shareholders
that base pay which had seen only one 5% increase the last
six years was below the market and should be increased.
The Committee considered a phased increase but on
balance felt it preferable for a one off simple rebasing
around the market median. For completeness, the average
salary increase for the workforce this year is 11.7% (and
has averaged 5.3% over the past six years)
• The pension/cash payments in lieu of pension for the
Executive Directors is to remain unchanged at 10% of
salary for the financial year ending 31 March 2023 (this
percentage is the same and in no case higher than for the
majority of workforce).
Annual bonus for 2023
The Committee intends to operate the assessment of the annual
bonus for 2023 in accordance with the new DRP. In particular
the Committee noted that
• shareholders universally welcomed the hard cap on the
annual bonus and the removal of the direct link to, and
funding from, a pool linked to Adjusted Profit before tax;
• the adoption of a more traditional balanced scorecard will
make the achievement of a maximum annual bonus award
significantly harder to achieve. The Committee remains
committed to a transparent and robust assessment of the
stretching targets that have been set for the annual bonus
• the very strong FY22 performance sets a high starting point
for FY23 financial measures in the balanced scorecard;
• the definition of Adjusted profit before tax for the annual
bonus measurement has been brought in line with best
practice making this metric more stretching to achieve; and
• they are committed to ensuring a focus on ESG metrics
within
the annual bonus scorecard. The Committee
considers ESG measurers are most appropriate in the annual
bonus scorecard so they help drive and measure continuous
compounding improvement.
* References and metrics related to the 2021 adjusted profit have not been restated as detailed in note 7 in the Remuneration Report.
107
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE There will, therefore, be metrics to ensure that the Executive
Directors connect and join up the components of ESG (what
we will in the future refer to as “Responsible Capitalism”). In
particular:
• Liontrust is a mainstream fund manager with multiple
investment teams and not just one that focuses on sustainable
investing. We will measure how investment teams, as well
as our own business, have made progress on integrating
and evidencing their Responsible Capitalism practices.
• There will be metrics around diversity and inclusion
which measure the effectiveness of work the Company is
undertaking to increase the number of female and ethnic
minority employees, and to ensure people in the business
are engaged and challenged.
• There will be work undertaken to ensure reward across the
workforce is aligned to the new DRP.
LTIP for 2023
The LTIP award for the Executive Directors for the year ending
31 March 2023, in line with the new DRP, can be summarised
as follows:
• LTIP awards for the financial year ended 31 March 2023
of 153,130 and 112,295 for John Ions and Vinay Abrol
respectively.
The Group will make these awards as soon as possible
after the announcement of the Group’s annual results.
The performance criteria for these LTIP awards will be fully
objectively measurable being earnings per share (60%) and
relative TSR growth (40%).
Acknowledging the feedback from our Shareholders on the
DRP and in particular concern over quantum and stretch the
Remuneration Committee has:
• increased the threshold performance target of Adjusted
Diluted EPS (excluding performance fees) from 7% to 8.5%
p.a. growth also noting that the vesting level for threshold
performance has fallen from 20% to 10% compared with
prior years LTIP awards
• revised its calculation of Adjusted Profit before tax (and
therefore also Adjusted Diluted EPS) to include, in particular,
share incentivisation expenses and depreciation. The overall
impact will be to lower Adjusted Diluted EPS and with no
consequential adjustment to the LTIP metrics will make them
more stretching and difficult to achieve.
• the recent movement of the Liontrust share price will result in the
overall value at award of the LTIP to be lower in percentage
terms as a multiple of salary. The Committee specifically
designed the LTIP as a fixed number of shares to reward
the Executive Directors for exceptional performance over the
longer term - the next ‘age’ of Liontrust. No adjustment will
be made on account of short term share price volatility which
avoids any potential windfall gains from the LTIP based on
award date. Decoupling the size of the LTIP award from a
percentage of salary also removes any ratchet affect.
Pay vs. performance at Liontrust – business performance in the
financial year ended 31 March 2022
Over the past year the Group has continued the excellent
progress made in previous years in executing its business
strategy, with excellent net inflows performance in a very
challenging environment, and completing the acquisition of
Majedie Asset Management Limited that has added £5.2
billion to AuMA and broadened our distribution capability.
We highlight in particular:
Financial measures:
• increasing gross profit excluding performance fees by 41%,
and including performance fees by 46%;
• increasing profitability (on an adjusted basis excluding
performance fees) by 55%, and when performance fees are
included by 50%;
• increasing diluted adjusted EPS (excluding performance fees)
by 50% and diluted adjusted EPS (including performance
fees) by 46%; and
• increasing dividends to shareholders by 53% to 72 pence
this year.
Strategic measures:
• increasing AuMA by 25% to £38.7 billion (including the
Majedie AuMA);
• £2.5 billion of net inflows, which are less than last year,
but given the very challenging year for flows, is an excellent
performance;
• successfully completing the acquisition of Majedie Asset
Management Limited and successfully integrating it into
Liontrust’s continuing operating platform; and
• increasing overall gender diversity and making positive
progress via various Diversity & Inclusion Committee initiatives,
all whilst maintaining appropriate risk management controls.
108 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE GROUP’S OVERALL PERFORMANCE
Assets under Management
and Advice*
Net inflows
Revenues
(ex performance fees)
Adjusted profit before tax
(ex performance fees)
25%
29%
46%
55%
0
25
50
75
100
125
150
175
200
225
* Includes Majedie AUMA acquired on 1 April 2022
2021
2022
With the implementation of a new DRP, which will support the
next phase of the strategy of our business, I think it is appropriate
to have a last look at the old Policy, since the introduction of
the LTIP, to determine whether my objective of keeping base
pay low and gearing reward linked to performance has been
successful.
Over the period since 2016 the Chief Executive’s base
remuneration has increased by 5% which is equivalent to less
than 1% per annum, thus meeting the target of being all but fixed.
The alignment of the Executive Directors’ interests with those
of shareholders and investors in our funds, combined with a
greater weight of total remuneration being given to long term
equity awards, is demonstrated by the chart. This year 70% of
the value of the LTIP vesting for John Ions has derived from the
same TSR as provided to shareholders. Over the last few years,
I am satisfied that there has been a strong link between the
total remuneration of the Chief Executive, the returns delivered
to shareholders and our growth in assets under management.
See the chart below for the link between pay and performance.
PAY VS. PERFORMANCE AT LIONTRUST – LINK BETWEEN PAY AND PERFORMANCE
x
e
d
n
I
n
r
u
e
R
t
600
500
400
300
200
100
0
2017
2018
2019
2020
2021
2022
CEO single figure (Short-Term) £000s
CEO single figure (Long-Term) £000s
Shareholder return index (March 2017 = 100)
Assets under Management index (March 2016 = 100)
CEO total pay change index (2016 = 100)
£9,000
£8,000
£7,000
£6,000
£5,000
£4,000
£3,000
£2,000
£1,000
£0
n
o
i
t
a
r
e
n
u
m
e
r
l
t
a
o
T
109
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE
In my opinion, one of the strongest ways in which Executive
Directors and shareholders are aligned is through those
Directors having a significant personal exposure to the business
via its shares and AuMA. This is explicit in the DRP requiring
the Executive Directors to build up and retain a significant
shareholding in the Company (increased under the new DRP
to at least five times salary) and the significant deferral of
variable remuneration. I am pleased to be able to confirm
that John Ions and Vinay Abrol each have exposure of 18 and
28 times base remuneration, respectively, in ordinary shares
and vested share options of the Company (as at 31 March
2022 using salaries effective on 1 April 2022). In addition,
John Ions and Vinay Abrol each also has a significant multiple
of base remuneration invested in Liontrust funds via the annual
bonus deferrals and personal fund holdings. The Funds into
which deferrals are made is across the broad range of Liontrust
funds as determined by the Committee.
Developments in legislation and governance
The new DRP, as approved by shareholders at our February
2022 GM, remains appropriate and no changes are
proposed this year.
The Annual Report on Remuneration is subject to an advisory
shareholder vote at our 2022 Annual General Meeting. The
2019 Annual Report on Remuneration contained publication
of the Company’s first CEO pay ratio, with the Committee
having considered it to be in shareholders’ best interests to
comply with the new requirement a year in advance of having
to do so. This year is therefore our fourth year of making such
a disclosure and corresponding analysis of the year-on-year
trend is included with the disclosure later in this report.
Additionally, the Committee has considered the various
requirements under the latest Corporate Governance Code
in relation to the justification of Executive Director pay in the
context of strategic rationale, internal and external measures,
and Company-wide pay policies. I am satisfied that the
provisions of paragraph 41 of the code have been met and, in
particular, that the policy has operated this year as intended in
terms of the Group’s performance and following the decisions
of the Committee as to quantum.
The Committee specifically considered progress across the
Company in gender equality when assessing bonus outcomes.
The Committee is using the Workforce Advisory Committee
(“WAC”) to engage with the wider employee group, generally
and specifically, on how Executive remuneration aligns with the
wider company pay policy. I can also confirm that I will meet
with the WAC to present and discuss remuneration matters.
Further details on our progress on employee engagement is
contained within the Nomination Committee report.
Mandy Donald, the Non-executive Director responsible for
employee engagement regularly attends Committee meetings,
to ensure that she is appraised of Committee initiatives and
to provide valuable feedback to the Committee on employee
engagement matters.
Shareholder engagement
I would like to thank shareholders for their support in approving
our Annual Report on Remuneration at our 2021 AGM with
over 90% of votes cast in favour.
I would also like to thank shareholders for their support in approving
our new DRP as our February GM, and in particular to those
shareholders involved in suggesting improvements to the design
of the DRP. In October 2021 the Committee consulted with the
Company’s top 20 shareholders with regards to the key features of
the new DRP, and then again for a second round of consultations in
December 2021. Changes were made to the new DRP, specifically
the structure of the LTIP and the calibration of targets, following
shareholder feedback. As I said to many shareholders throughout
the process I believe iteration is a strength not a weakness.
The focus of shareholders will rightly now be on how the
newly adopted DRP will be implemented. We believe that
Remuneration should play a part in helping retain and continue
to motivate a truly outstanding Executive team (as evidenced
by corporate performance over the last 11 years) and ensure
they are proportionately rewarded for delivering exceptional
value for shareholders over the next phase of the Company’s
development provided in the words of one shareholder they
“knock it out of the park”.
We welcome feedback from our shareholders on all aspects
of Executive Director remuneration and will be continuing
engagement with them in the run up to the AGM and beyond. We
hope that we will earn your support in respect of our Remuneration
Report for 2022 at the forthcoming AGM, noting that in terms of
the outcome for the financial year ended 31 March 2022, the
Remuneration Report for 2022 is based on the old DRP.
The role of the Committee and its composition
The Committee is charged with determining remuneration
policy for, and setting pay and other benefits of, the Executive
Directors of the Company and reviewing pay and other
benefits of the Group’s members and employees.
All its recommendations are referred to the Board. Any Director,
who has an interest in the matter which is the subject of a
recommendation to the Board, abstains from the Board’s vote
in relation to that matter and takes no part in its deliberations.
The Committee may use external advisors if required. The terms
of reference of the Committee, which explains its role and the
authority delegated to it by the Board, are available on the
Company’s website or upon request from the Company Secretary.
110 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE 111
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE In the past it has been our policy that all Non-executive
Directors are members of the Board’s committees. Given the
recent increase in the membership of the Board, it was decided
by the Board that each Committee, other than the Nominations
Committee will consist of one Non-executive Director as Chair
and three Non-executive Directors as members. Therefore,
on 25 March 2022 Mandy Donald stepped down from the
Committee, and I would like to thank her for her support and
contribution since she joined the Committee in 2019. I would
also like to welcome Emma Howard Boyd, Quintin Price and
Rebecca Shelley, all of whom joined the Committee during the
financial year ended 31 March 2022.
George Yeandle
Chair of the Remuneration Committee
21 June 2022
Annual report on remuneration
This remuneration report details the remuneration outcomes for the financial year ended 31 March 2022 across Liontrust and
specifically for the Executive and Non-executive Directors and compares them to remuneration across the wider group, remuneration
outcomes for the previous financial year; and proposals for Executive remuneration for the forthcoming financial year.
The Directors’ remuneration for the year ended 31 March
2022 was managed in line with the old Directors’ remuneration
policy (“DRP”) which was approved by shareholders at the
2018 DRP General Meeting. Proposed remuneration for the
year ended 31 March 2023 is in accordance with the new
DRP approved at the February 2022 GM.
The report sets out:
1. Remuneration outcome for the year to 31 March 2022 –
including the context for the Directors’ remuneration and
the performance metrics that the Committee considered
when setting the overall annual bonus pool.
2. Allocation of variable remuneration - information on how
the annual bonus pool awards were allocated across the
Group.
3. Deferral of variable remuneration – Directors’ deferred
remuneration rights under the LTIP and DBVAP.
4. Proposed remuneration for the financial year ending 31
March 2023.
5. Returns to shareholders and Executive remuneration –
returns over the past 10 years are compared with the total
remuneration of the Chief Executive over the same period.
6. Directors’ shareholdings – the share interests of Directors
and their connected persons.
7. Other disclosures and historical information.
8. Directors’ remuneration policy.
To aid the reader of this report the term “salary” is used as
a collective term for employee salary and member fixed
allocation; and “annual bonus” to refer to annual bonus for
employees and variable allocation for members.
112 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE 1. REMUNERATION OUTCOME FOR THE YEAR TO 31 MARCH 2022
1.1 Single total figure for remuneration
Executive Directors (audited information)
A. Fixed pay
Base salary
Benefits in kind -private medical insurance
Cash in lieu of pension
Total Fixed pay
B. Annual Bonus
Cash bonus
DBVAP
Total Annual Bonus
C. Total pay for the financial year
Sub-total (A+B)
D. Vesting of LTIP awards
Jon Ions
Year to 31 March
Vinay Abrol
Year to 31 March
2022
£’000
348
4
35
387
870
1,915
2,785
2021
£’000
348
4
35
387
870
1,915
2,785
2022
£’000
328
5
33
366
786
786
1,572
2021
£’000
328
4
33
365
488
1,085
1,573
3,172
3,172
1,938
1,938
Base value element of vested LTIP awards
863
829
569
546
Share price appreciation and dividend equivalent elements on
vested LTIP awards
Total LTIP awards vesting
E. Other
SIP matching shares
Total Other
Total remuneration (C+D+E)
Of which:
Total variable remuneration (B + D)
1,975
2,838
2,643
3,472
1,301
1,870
1,742
2,288
4
4
4
4
4
4
4
4
6,014
6,648
3,812
4,230
5,623
6,257
3,443
3,861
113
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE 1.1 Single total figure for remuneration (continued)
Non-executive Directors (audited information)
Alastair Barbour
Year to 31 March
Mike Bishop2
Year to 31 March
Mandy Donald
Year to 31 March
Sophia Tickell2
Year to 31 March
Basic Non-executive Director fee
Fee for
Non-executive Chair
Fee for Senior Independent Director
Fee for Sub-committee Chair / membership:
Audit & Risk Committee
Nomination Committee
Remuneration Committee
Fee for membership of other Group
Committees
Benefits1
Total
Basic Non-executive Director fee
Fee for
Non-executive Chair
Fee for Senior Independent Director
Fee for Sub-committee Chair / membership:
Audit & Risk Committee
Nomination Committee
Remuneration Committee
Fee for membership of other Group
Committees
Benefits1
Total
2022
£’000
2021
£’000
45
65
–
–
4
–
–
–
45
65
–
–
4
–
–
–
2022
£’000
22
2021
£’000
45
2022
£’000
45
2021
£’000
45
2022
£’000
22
2021
£’000
45
–
3
2
4
2
8
–
–
6
4
8
4
13
–
80
–
–
8
4
4
12
–
73
–
–
8
4
4
3
–
–
–
2
2
2
2
–
–
–
4
4
4
4
–
64
30
61
114
114
41
George Yeandle
Year to 31 March
Quintin Price3
Year to 31 March
Rebecca Shelley4
Year to 31 March
Emma Howard Boyd5
Year to 31 March
2022
£’000
45
2021
£’000
45
2022
£’000
34
–
–
4
4
8
10
–
71
–
–
4
4
8
9
–
–
–
3
3
3
7
–
70
50
2021
£’000
–
–
–
–
–
–
–
–
–
2022
£’000
18
–
–
2
2
2
–
–
24
2021
£’000
2022
£’000
2021
£’000
–
–
–
–
–
–
–
–
–
8
–
–
1
1
1
–
–
11
-
–
–
–
–
–
–
–
–
1 Non-executive Directors are entitled to the reimbursement of expenses in relation to the performance of their duties, such expenses
are reported above grossed up for income tax and national insurance.
2Resigned 23 September 2021.
3Appointed 1 July 2021.
4Appointed 1 November 2021.
5Appointed 19 January 2022.
114 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE 1.2 Annual bonus
The annual bonus for the financial year ended 31 March 2022 were based on the following key performance
metrics. The performance outcomes for each key performance indicator are also shown below:
Performance Metric
Weighting
Threshold
Target
Actual
Weighted
Result %
Result Notes
Financial Measures (33.4%)
Change in Adjusted Profit
Before Tax (excluding
Performance fees profits)
22.20%
30.00%
35.00%
63.70%
22.20%
Operating Margin
11.20%
38.00%
39.00%
41.60%
11.20%
Business Measures (33.3%)
Distribution effectiveness
Net flows compared to
budget of £2,941 million
(percentage of budget)
Broadening International
sales (increase in AuMA
compared to last year)
Investment performance,
(Percentage of AuMA over
1, 3 and 5 years in 1st or
2nd Quartile)
Strategic Measures (33.3%)
Talent management (Key
Executive turnover)
13.9%
80%
110%
85%
7.0%
5.5%
35%
50%
3%
0.0%
13.9%
50%
75%
71%
8.3%
8.3%
Medium
Low
No loss
5.8%
See below for a summary of the outcomes and results used above:
Outcome
Above Target
Around Target
Between Target & Threshold
Around Threshold
Below Threshold
Result
Calculated adjusting for Share Incentive
Costs, Depreciation and Property ROU
costs. Over 60% above target in a
challenging market for fund flows, so
scores 100% (top of Above Target).
1.5% above target so scores 100% (top
of Above Target)
Following the sale of the Verbatim
Growth Portfolio funds in September
2021, budget for net flows adjust
for the relevant flows between
announcement and termination of the
mandate as outflows are related to
a business sale. Also, noting a very
challenging year for industry net flows,
the resultant net inflows outcome was
Between Threshold and Target so score
middle of this band at 50%.
Disappointing year for flows with a
marginal increase in AuMA. Below
Threshold score of 0%
In a very difficult year for Quality
Growth with the rotation into Value short
term performance was challenging,
albeit long term performance remains
very strong, so score 60% (bottom of
Around Target).
Over the period there have been very
few employee/member losses. Good
progress made on building out our
Senior management succession plan, so
scores 70% (middle of Around Target).
Continues overleaf
115
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE Result Notes
Diversity & Inclusion Committee
established and working well. Senior
management objectives amended to
include a SMART Objective to consider
diversity when recruiting. Increased
diversity at board level.
Scores top of Around Target. Updated
Maternity, Paternity and Parental Leave
policies significantly increasing benefits
and held two events (Breaking the
Bias panel discussion and Women’s
Networking event) for International
Women’s Day, so scores 70% (middle
of Around Target).
John Ions and Vinay Abrol have
maintained appropriate risk controls,
carefully considering management
decisions in light of risk considerations,
and spending time on a very regular
basis with the Chief Risk Officer and
Chief Compliance Officer, and on a
regular basis with Internal Audit, so
score 90% (middle of Above Target)
Achieved targets including successful
Integration of Majedie Asset
Management and strong flows
performance given a very challenging
market. Good progress made
on climate related matters for our
investment funds. So score 90% (middle
of Above Target)
Performance Metric
Weighting
Threshold
Target
Actual
Diversity & Inclusion
8.3%
N/a
N/a
See
comments
Weighted
Result %
5.8%
Risk management,
compliance and conduct
8.3%
Strong
Strong
7.5%
Personal performance
8.3%
3
4
7.5%
Totals
100.0%
75.3%
See below for a summary of the outcomes and results used above:
Outcome
Above Target
Around Target
Between Target & Threshold
Around Threshold
Below Threshold
Result
116 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE
Executive Director
Result Key performance in the financial year ended 31 March 2022
John Ions
John Ions has led the senior executive team to achieve continued excellent financial performance with Adjusted Profit
before tax increasing by 47% compared to last year including reporting performance fee revenues of £12.5 million,
and £2.5 billion net inflows despite a challenging environment for net inflows.
Alongside Vinay Abrol, John Ions successfully led project to acquire Majedie Asset Management Limited,
including the negotiation of the Sale & Purchase Agreement and the related due diligence process. Following
the announcement of this acquisition in December 2021, jointly led the project to integrate the Majedie Asset
Management Limited into Liontrust, with successful internal re-organisation on completion of the acquisition and the
re-organisation of the outsourced administration arrangements scheduled to complete later in 2022.
Alongside Vinay Abrol, led external shareholder relations, with excellent positive feedback on strategy and
performance from these meetings, and developing a strong relationship with our larger shareholders.
Always ensured that risk and compliance were important factors when managing the Group, including meeting with
the Chief Risk Officer, Chief Compliance Officer and Internal Audit on a regular basis.
Vinay Abrol
Vinay Abrol has shown strong leadership of the Finance, Operations, Risk, Compliance, Technology & Data,
Property & Facilities, Product, Human Resources and Trading functions. Delivered budget and cost controls in the
financial year and led the Group through the annual and half-year reporting cycles.
Vinay Abrol has been instrumental in leading the Group’s relationships with the Financial Analysts, with regular
meetings with the analysts from Singer Capital Markets, Panmure Gordon, Numis, KBW and Berenberg. During the
year Peel Hunt initiated coverage bringing analyst coverage to six firms.
Alongside John Ions successfully led project to acquire Majedie Asset Management Limited, including the negotiation
of the Sale & Purchase Agreement and the related due diligence process. Following the announcement of this
acquisition in December 2021, jointly led the project to integrate the Majedie Asset Management Limited into
Liontrust, with successful internal re-organisation on completion of the acquisition and the re-organisation of the
outsourced administration arrangements scheduled to complete later in 2022.
See below for a summary of the outcomes and results used above:
Outcome
Above Target
Around Target
Between Target & Threshold
Around Threshold
Below Threshold
Result
Historically, the Committee has increased the aggregate annual bonus pool for the Executive Directors (“ED Pool”) by 50% of the
increase in Adjusted Profit before tax (excluding performance fee profits), The increase in our adjusted profit before tax (excluding
performance fees) on a like for like basis is 63.7%, meaning the ED Pool increases to £5.89 million (32.1% increase on £4.46
million). Applying the bonus scorecard outcome of 75.3% to £5.89 million gives an ED Pool of £4.44 million, a small increase
on the ED Pool in 2021, when it was £4.36 million. Notwithstanding the exceptional progress made in the year in executing
our strategy and the outstanding financial results the ED Pool has been capped at the same level as last year, as I outlined in my
letter within the Notice of General Meeting for the approval of the new DRP. The cash element of the bonus for Executive Directors
is limited to 250% of salary with 69% of the award deferred into a range of Liontrust Funds for John Ions and 50% deferred for
Vinay Abrol.
The Committee also considered that no further adjustments up or down should be made on account of the risk and personal
performance moderator.
This bonus/variable allocation pool for the Executive Directors translates into individual annual bonuses/variable allocations to
the Executive Directors of between 480% and 800% of base remuneration (2021: 480% and 800%). The Committee also set the
level of deferral into Group managed funds at 69% for John Ions (2021: 69%) and 50% for Vinay Abrol (2021: 69%) over the
period 1 April 2022 to 31 March 2025; and therefore linked to the performance of the relevant Liontrust funds. The vesting of
deferred awards are not subject to any performance condition but are subject to continuous service conditions and also to malus
and claw back provisions.
117
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE The level of deferral means that the cash bonus/variable allocation for John Ions and Vinay Abrol is 250% and 240% of base
remuneration respectively (2021: 250% and 149%).
1.3 Malus and claw back
For the annual bonus in respect of the financial year ended 31 March 2016 and onwards, malus and claw back provisions apply
whereby the payment of such cash bonus, and the unvested amount deferred into Group managed funds can be reduced, withheld
or reclaimed in the exceptional event of: misstatement or misleading representation of performance, a significant failure in risk
management and control, or serious misconduct for which the individual is personally responsible or directly accountable. Malus
provisions apply for a period from the date of grant to the relevant vesting date of the relative award and claw back provisions
apply for a period of 2 years from date of vesting of the relevant award.
For the LTIP awards, claw back and malus provisions will apply whereby the LTIP awards can be reduced, withheld or reclaimed
in the exceptional event of: misstatement or misleading representation of performance, a significant failure in risk management and
control, or serious misconduct for which the individual is personally responsible or directly accountable.
1.4 Pensions
All employees and members (including Executive Directors) are eligible to receive pension contributions of at least 10% of base
salary.
None of the Executive Directors have a prospective entitlement to a defined benefit pension by reference to qualifying service.
The Committee wishes to clarify its approach set out in the recently approved new DRP with regard to the provision of pensions
to the Executive Directors. The shareholders approved the new DRP which is fully compliant with corporate governance best
practice in that the Executive Directors may participate in pension arrangements, or receive cash in lieu, which are fully aligned
with that of the Liontrust workforce. Employees of Liontrust have flexibility and choice, in certain circumstances, over the balance
between employer pension contributions and cash in lieu, with options to take cash, some or all of the amount the Company would
otherwise contribute to the pension plan.
The percentage that the Executive Directors can currently receive as a pension contribution or cash equivalent payment is set at
10% of salary, being the same rate as for the majority of employees and members. Where there is any change to this rate then
the Executive Directors will be entitled to receive the same contribution, or cash equivalent payment; which, for the avoidance of
doubt, could be more than 10% of salary.
2. ALLOCATION OF ANNUAL VARIABLE REMUNERATION
Annual bonus for the Executive Directors as a percentage of the aggregate annual bonus pool for all employees and members
(including fund managers) has decreased again this year, at 6.6% for the financial year ended 31 March 2022 (2021: 8.5%),
with 4.3% allocated to John Ions and 2.3% to Vinay Abrol.
2.1 Percentage change in Directors’ remuneration
The percentage change in all Directors’ pay (defined for these purposes as salary, fees for non-Executives, taxable benefits, annual
bonus and DBVAP awards in respect of the relevant year) between the year ended 31 March 2021 and the prior year and the
same information, on an averaged basis, for all employees and members (excluding the Chief Executive and Directors) is shown
in the table below:
Directors percentage
change year ended
31 March 2022
Directors percentage
change year ended
31 March 2021
Employees and Members
year ended
31 March 20221
Employees and Members
year ended
31 March 2021
Salary
Benefits2
Bonus
2%3
0%
0%
2%
-12%
60%
12%
7%
103%
9%
19%
181%
1Based on a consistent population of employees and members who received a full year’s remuneration in each year
2Benefits comprise private medical insurance, pension contributions and other sundry benefits.
3Increase relates to variation in non-Executive fees only.
118 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE 2.2 Chief Executive pay ratio
The table below shows the ratio of Chief Executive’s pay to Lower quartile, median and upper quartile for employee member:
Ratio for year ended
31 March 2022
Ratio for year ended
31 March 2021
Ratio for year ended
31 March 2020
Ratio for year ended
31 March 2019
Lower quartile ratio
Median ratio
Upper quartile ratio
69x
39x
16x
84x
45x
22x
78x
43x
18x
56x
33x
17x
Based on full time equivalent employees/members
The Group uses ‘Option A’ to calculate the Chief Executive pay ratio. This method uses the individual pay and benefits of all UK
members and employees, and is therefore consistent and comparable with the approach that must be used for the CEO single figure.
It allows a like-for-like comparison to take place between the pay data of the CEO and members and employees at the lower, median
and upper quartiles. For the purpose of this disclosure, the Company has chosen 31 March 2021 as the reference date on which the
pay for all employees and members was calculated, consistent with our approach in prior years.
CEO single figure
Employee/Member single figure
Employee/Member salary component
Lower quartile
£’000
–
87
54
Median
£’000
6,014
156
88
Upper quartile
£’000
–
384
126
2.3 Relative importance of spend on pay
The following chart shows the Group’s Adjusted Profit before tax (excluding and including performance fee profits), total member
and employee remuneration and dividends declared on Ordinary shares for the financial year ended 31 March 2022 and 31
March 2021.
Adjusted profit before tax
(excl. performance fee
profit) (£’000)
Adjusted profit
before tax (£’000)
Total member and
employee remuneration
(£’000)
Dividend spend (£’000)
55%
50%
32%
60%
0
20,000
40,000
60,000
80,000
100,000
2021
2022
*These are alternative performance measures (‘APM’). See page 30 and Note 7.
2.4 Wider workforce remuneration and engagement
The Committee is closely involved in considering the remuneration policies and levels of the wider Liontrust workforce. The Committee’s
work involves debate, discussion and ultimate approval of the Group-wide annual bonus/variable allocation and long-term
incentives; as well as the salary/fixed allocation increases for all employees and members, with consideration given to the amounts
and proportions of total remuneration allocated to different areas of the business. Part of this discussion requires an assessment of
the financial performance of the business, including Adjusted Profit before tax (excluding performance fees), net flows and fund
performance, all of which are also key metrics under the bonus/variable allocation scorecard for Executive Directors.
119
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE One of the recurring exercises undertaken by the Committee on an annual basis is a review of external compensation benchmarking
data, giving an overview of fixed and total remuneration levels for all employees and members relative to the wider market. This
data allows the Committee to challenge remuneration decisions at a more granular level and make proposals to the Executive
Directors in respect of an upcoming remuneration review round. The Committee approves all compensation for Code Staff,
including for fund managers. Whilst this process is a regulatory driven requirement, it involves a detailed and robust discussion.
The Committee is also provided with data illustrating the mean and median annual bonus levels and salary increase percentage
split by gender for the current and previous financial year, in order that it can also analyse the outcomes from a gender pay
perspective.
During the financial year ended 31 March 2021, Liontrust established a workforce advisory committee (“WAC”), whose Chair
meets with the Committee Chair to discuss remuneration related matters. This engagement is Liontrust’s method for ensuring a
formal dialogue exists between employees, members and the Committee. It provides the opportunity for employees and members
to engage with the Committee via the WAC on any relevant employee and/or member remuneration matter.
Collectively this work helps demonstrate the Committee’s considerations in appropriately balancing the remuneration outcomes for
the wider employee and member population with its decisions regarding Executive Director Remuneration.
3. DEFERRAL OF VARIABLE REMUNERATION
The significant deferral of variable remuneration (deferral of bonus and LTIP awards) is an important component of the Company’s
remuneration policy, and I am pleased to be able to confirm that John Ions and Vinay Abrol are deferring 76% and 64% of their
variable remuneration, respectively:
Director
John Ions
Vinay Abrol
Type of variable remuneration
Value (£’000)
% deferred
Cash bonus
DBVAP
LTIP award FY20221
Total
Cash bonus
DBVAP
LTIP award FY20221
Total
870
1,915
870
3,655
786
786
573
2,146
n/a
52%
24%
76%
n/a
37%
27%
64%
1Awarded 23 June 2021
3.1 Vested LTIP Awards
Background
The LTIPs for the financial year ended 31 March 2019, which were granted on 27 June 2018, and vested on 22 June 2021, to
John Ions and Vinay Abrol over 147,607 and 97,270 Ordinary shares respectively. 146,397 shares for John Ions and 96,472
shares for Vinay Abrol vested (99.18%), with 87,839 and 57,884 Ordinary shares released on 27 June 2021.
Performance measures and vesting
Condition
Test
Result
TSR Performance (40%)
TSR performance (% growth per annum):
Below 10% per annum then nil vests, at
10% per annum growth 20% vests and
at 15%
per annum and above 100% vests.
Straight line vesting between 10% per
annum and 15% per annum growth
EPS Performance (30%)
EPS growth per annum: Below 10% per
annum then nil vests, at 10% per annum
growth 20% vests and at 15% per annum
and above 100% vests. Straight line
vesting between 10% per annum and
15% per annum growth
Start of the performance period:
27 June 2018, Starting share price:
580.13p, End of the performance
period: 27 June 2021.
Three-month average share price to end
of performance period is 1,558.57p,
meaning an annualised TSR over the
period of 42% versus a Target of 15% so
100% vests
Starting EPS (Diluted Adjusted EPS
excluding performance fees): 40.19p
for the financial year ending 31 March
2018
Adjusted diluted EPS excluding
performance fees for the financial year
ended 31 March 2021 was 80.14p,
which is an annualised return of 26%
versus a Target of 15% so 100% vests.
% vesting
40%
30%
120 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE Condition
Test
Result
Strategic Objectives Performance (30% or
7.5% each)
Net inflows compared to target: Below
75% of target nil vests, at 75% of target
20% vests and at 125% of target and
above 100% vests. Straight line vesting
between 75% of target and 125% per
annum growth.
Growth in assets under management
compared to target: Below 75% of target
nil vests, at 75% of target 20% vests and
at 125% of target and above 100% vests.
Straight line vesting between 75% of target
and 125% per annum growth.
Investment performance: Below 50% of
funds in 1st or 2nd quartile nil vests, at
50% of funds 20% vests and at 75% of
funds and above 100% vests. Straight line
vesting between 50% of funds and 75%
of funds
1. Developing existing employees/
members and recruiting new talent
(25% of 7.5%).
2. Providing the products and services
that clients require (25% of 7.5%).
3. Broadening the client base in the UK
and internationally (25% of 7.5%).
4. Maintaining an appropriate risk
controls and compliance environment
(25% of 7.5%).
Starting year for net inflows: Year ending
31 March 2018. Ending year for net
inflows: Year ending
31 March 2021.
Adjusted diluted EPS excluding
performance fees for the financial year
ended 31 March 2021 was 80.14p,
which is an annualised return of 26% versus
a Target of 15% so 100% vests.
Starting year for net inflows: Year ending
31 March 2018. Ending year for net
inflows: Year ending
31 March 2021.
FY19 target of 14% vs actual of 21% FY20
target of 12% vs actual of 27%, FY21
target of 16% vs 93% actual. Cumulative
excess of 216% versus a Target of 125%
so 100% vests.
Starting year for investment performance:
Year ending
31 March 2019. Ending year for
investment performance:
Year ending 31 March 2021
FY19, 85% of relevant AuMA in 1st or
2nd quartile; FY20, 83% of relevant
AuMA in 1st or 2nd quartile; and FY21,
51% of relevant AuMA in 1st or 2nd
quartile. Average over the period is 94%
versus a Target of 75% so 94.08% vests.
% vesting
7.5%
7.5%
7.06%
1. Limit senior employee/member losses
and strengthen the management team.
2. Broaden the product range.
3. Expand out multi-asset and international
franchise.
4. Strong risk controls and create a
positive compliance environment.
1. Over the period there have been
7.12%
very few employee/ member losses
and some good hires (e.g. Head of
Institutional Business, Head of Product
Development, Head of Portfolio & Data
Insights, Chief Technology Officer).
2. Acquired the Global Equity team as
part of Neptune acquisition; Architas
acquisition bolstered multi-asset range
and AUMA to over £7bn.
3. Over the period Multi-Asset AuMA
grew from £700m to £1,522m
(ex-Architas), international AUMA
increased from £430m to £1,675m
(nearly 4x)
4. Vinay and John have maintained
appropriate risk controls, carefully
considering management decisions
in light of risk considerations, and
spending time on a very regular
basis with the Heads of Risk and
Compliance, and with Internal Audit.
95% vests
99.18%
Given the above, in particular the very strong total shareholder return of 42% per annum over the period and 26% per annum
increase in Adjusted Diluted EPS (excluding performance fees), the Committee approved 99.18% vesting of the LTIP awards for
John Ions and Vinay Abrol.
Retention requirements
On vesting, 60% of the LTIP awards, so for John Ions 87,839 Ordinary shares and for Vinay Abrol 57,884 Ordinary shares, were
released. The remaining LTIP awards will be released in June 2022 (29,279 Ordinary shares for John Ions and 19,294 Ordinary
shares for Vinay Abrol) and June 2023 (29,279 Ordinary shares for John Ions and 19,294 Ordinary shares for Vinay Abrol).
121
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE Year ended 31 March 2022
John Ions
Vinay Abrol
LTIP awards that
vested
146,397
96,473
Value on grant
£863,113
£568,776
Gain result from share price appreciation and
dividend equivalent payments on vested LTIP
awards over the vesting period
Value on
vesting
£1,974,559
£2,837,672
£1,301,222
£1,869,998
Year ended 31 March 2021
John Ions
Vinay Abrol
LTIP awards that
vested
234,771
154,722
Value on grant
£828,753
£546,176
Option exercise details (audited information)
Year ended 31 March 2022
Gain result from share price appreciation and
dividend equivalent payments on vested LTIP awards
over the vesting period
Value on
vesting
£2,642,555
£3,471,308
£1,741,542
£2,287,718
Date
Options exercised
Share price
at exercise (p)
John Ions
Vinay Abrol
28-Jun-21
28-Jun-21
10-Aug-21
28-Jun-21
28-Jun-21
10-Aug-21
36,814
87,839
59,071
24,262
57,884
38,930
The exercise price for the LTIP awards was nil pence.
For the year ended 31 March 2021
John Ions
Vinay Abrol
Date
Options exercised
28-Jun-20
10-Aug-20
28-Jun-20
10-Aug-21
110,444
59,071
72,786
38,930
The exercise price for the LTIP awards was nil pence.
1768.8
1768.8
2108.8
1768.8
1768.8
2108.8
Share price
at exercise (p)
1387.2
1327.3
1387.2
1327.3
Value (£)
Award
649,872
FY18 Tranche 2
1,550,611
FY19 Tranche 1
1,245,704
FY17 Tranche 3
428,293
FY18 Tranche 2
1,021,819
FY19 Tranche 1
820,965
FY17 Tranche 3
Value (£)
Award
1,532,079
FY18 Tranche 2
784,049
FY17 Tranche 2
1,009,687
FY18 Tranche 2
516,718
FY17 Tranche 2
3.2 LTIP Awards for the financial year ending 31 March 2022 (audited information)
The Company’s shareholders approved the LTIP under which awards were granted on 23 June 2021 on 24 February 2016 and the LTIP
was adopted by the Board on 21 March 2016, and subsequently amended on 25 September 2018 and 19 June 2019. The rules of the
LTIP state that awards may be granted to participants within the 42-day period following the date of publication of the annual results of the
Company, approval of the LTIP by shareholders, or such other period as may be determined by the Committee in exceptional circumstances.
LTIP awards for the financial year ending 31 March 2022
Percentage LTIP award
of base
remuneration
LTIP awards granted
Value on grant
Date of grant
Vesting date (subject to
performance conditions
being met)
John Ions
Vinay Abrol
250%
175%
53,389
35,182
£870,000
£573,000
23-Jun-21
23-Jun-21
23-Jun-24
23-Jun-24
On vesting 100% of the LTIP awards are subject to a two year holding period, with the post vesting releases subject to continued
employment.
122 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE These LTIP awards are subject to continued employment and achievement of a range of balanced and holistic performance
conditions that are linked closely to the Company’s business strategy/KPIs. The performance criteria for these LTIP awards are:
• absolute shareholder return (20%)
Start of the performance period: on 23 June 2021, with the starting share price being 1559.53p, which is the 30-day average
to the day before the date of grant. The end of the performance period: 23 June 2024.
Performance will be assessed against the following targets:
Absolute TSR growth p.a.
Vesting (% of maximum)
<10%
10%
15%
NIL
10%
100%
There will be straight line vesting between targets.
• relative shareholder return (20%)
Using the same starting price as above, performance will be assessed against FTSE All Share Total Return Index (starting index
value 7,862.94 which is the 30-day average to the day before the date of grant). The end of the performance period: 23 June
2024.
Performance will be assessed against the following targets:
Relative TSR growth p.a.
Vesting (% of maximum)
<10%
10%
15%
NIL
10%
100%
There will be straight line vesting between targets.
• Diluted adjusted earnings (excluding performance fees) per share (30%)
Starting EPS (Diluted Adjusted EPS excluding performance fees): 79.67p for the financial year ending 31 March 2021. End of
the performance period is 31 March 2024.
Performance will be assessed against the following targets:
EPS growth p.a.
Vesting (% of maximum)
<10%
10%
15%
NIL
10%
100%
There will be straight line vesting between targets.
• Other strategic objectives (30%) which include
1. Net inflows. Net inflows versus budget for the financial years ending 31 March 2022, 2023 and 2024. The budget targets
are commercially sensitive and will be disclosed after vesting.
2. Fund performance: Below 50% of funds in 1st or 2nd quartile nil vests, at 50% of funds 10% vests and at 75% of funds and
above 100% vests.
3. Other strategic measures, which are commercially sensitive and will be disclosed after vesting.
For further details on the aforementioned LTIP awards and performance conditions see the tables on LTIP Awards and LTIP
Performance Conditions under the Share Awards section below.
123
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE Subject to performance conditions being met, there is also a shareholding requirement of 400% salary for Executive Directors that
is linked to these LTIP awards as follows:
• if the target shareholding is met on the vesting date of the first LTIP award (i.e. three years from the grant date) then this award
will vest in full;
• if less than 50% of the target shareholding is met then the first award will lapse in full;
• if between 50% and 100% is met, vesting will be scaled back proportionately on a straight-line basis;
• participants will be required to build up and retain at least one-third of their target shareholding within 12 months of the date of
grant of the first award and must maintain at least 50% of the target during the following two-year period. Failure to do so will
impact the grant of subsequent awards;
• for subsequent LTIP awards, vesting is conditional on the target shareholding level being maintained; and
• the shareholding requirement can be satisfied through unexercised options under the Company’s existing long-term incentive
plans, shares acquired through own resources and/or the deferral of annual bonuses into Company shares.
4. PROPOSED REMUNERATION FOR THE FINANCIAL YEAR ENDING 31 MARCH 2023
Remuneration for the year ended 31 March 2023 has been set in accordance with the new DRP approved by shareholders at
the February GM.
4.1 Annual fixed remuneration
The Committee has set the salary of the Executive Directors at £550,000 for John Ions and £420,000 for the Vinay Abrol, in
accordance with the new DRP. The salary increases place John Ions at or below the median of the FTSE 250 peer group and
below upper quartile of the peer group for the Vinay Abrol. Any salary increases in future years will be no more than the average
for the wider workforce for that year.
The Board itself determines the fees of the Non-executive Directors of the Company, each of whom abstains in respect of matters
relating to their own position. As part of the implementation of the new DRP the Board has increased the fees for the Non-executive
Directors to more closely align with the median fee structure of other FTSE 250 financial services companies.
In accordance with the new DRP, the base Non-executive Chair fee will increase to £210,000 and the base Non-executive
Director fee will increase to £65,000 plus fees for other roles as noted below. The Non-executive Chair’s aggregate fee is capped
at £210,000 (increase from £200,000) and hence the Chair waives any other fees for other roles and committees that would
otherwise be payable. Non-executive Directors aggregate fees are capped at £150,000.
Role
Senior independent director
Audit & Risk Committee chair / member
Nomination Committee chair / member
Remuneration Committee chair / member
Other committees
Engagement roles
Fee
£12,000
£20,000 / £9,000
£15,000 / £5,000
£20,000 / £9,000
£9,000
£5,000
Non-Executive Directors will be encouraged to use a percentage of their annual fee to purchase and hold shares in Liontrust.
4.2 Annual bonus
Annual bonus for the financial year ending 31 March 2023 will be determined using new DRP. In summary, this will comprise
a balanced scorecard of financial and non-financial measures including ESG, with assigned weightings; and introduction of a
minimum weighting of financial measures where financial measures will account for at least 50%. 50% will be deferred into shares
with pro-rata vesting over three years (vesting 1/3 each year) unless the Executive’s shareholding is greater than 10 times base
salary, in which case the Executive can elect to defer into funds.
4.3 LTIP awards
LTIP awards for the financial year ending 31 March 2023 will be determined using the new DRP with 153,130 nil price options
for John Ions and 112,295 nil price options for Vinay Abrol. The performance period will be from 1 April 2022 to 31 March
2025 with performance conditions as noted below; and subject to a two year post-vest holding period:
• Diluted adjusted earnings (excluding performance fees) per share (60%)
Starting EPS (Diluted Adjusted EPS excluding performance fees): 120.68p for the financial year ending 31 March 2022. End
of the performance period is the financial year ending 31 March 2025.
124 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE
Performance will be assessed against the following targets:
EPS growth p.a.
Entry level performance: 8.5%
Target performance: 11%
Stretch performance: 16.75%
Vesting (% of maximum)
10%
50%
100%
There will be straight line vesting between performance level thresholds. NIL vesting for performance below entry level.
• Diluted adjusted earnings (excluding performance fees) per share (60%)
Starting EPS (Diluted Adjusted EPS excluding performance fees): 120.68p for the financial year ending 31 March 2022. End
of the performance period is the financial year ending 31 March 2025.
Performance will be assessed against the following targets:
EPS growth p.a.
Entry level performance: 8.5%
Target performance: 11%
Stretch performance: 16.75%
Vesting (% of maximum)
10%
50%
100%
There will be straight line vesting between performance level thresholds. NIL vesting for performance below entry level.
• Relative TSR growth versus FTSE250 ex-IT (40%)
Performance will be assessed against the FTSE250 index.
Performance will be assessed against the following targets:
Relative TSR growth versus FTSE250
Vesting (% of maximum)
Entry level performance: median performance
Stretch performance: upper quintile performance
10%
100%
There will be straight line vesting between entry level and stretch performance. NIL vesting for performance below entry level.
4.4 Cap on total remuneration
The Business, Energy and Industrial Strategy Committee report on Executive Pay, released in March 2020, suggested an overall
cap on total remuneration for executives in any year. Whilst not a requirement to include it currently, I can confirm that the
Committee considered introducing a cap on total remuneration, and decided against currently doing so. However, the Committee
intends to re-consider the appropriateness of implementing a total remuneration cap for a business of our size, and will update
shareholders in due course on the results of its further consideration.
5. RETURNS TO SHAREHOLDERS AND EXECUTIVE REMUNERATION
5.1 Pay versus performance
Share price performance
The graph below illustrates the performance of the Group, based on share price returns, compared to FTSE All-Share and FTSE 250
indices, from 1 April 2012. These indices have been chosen to put the Group’s performance into the context of the overall UK stock
market, and in the context of more similar sized operating companies.
Liontrust Asset Management PLC
FTSE All-Share Index
FTSE 250
30%
25%
20%
15%
10%
5%
0%
31-M ar-12
31-M ar-13
31-M ar-14
31-M ar-15
31-M ar-16
31-M ar-17
31-M ar-18
31-M ar-19
31-M ar-20
31-M ar-21
31-M ar-22
125
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE Table of historic levels of Chief Executive remuneration
The table below shows the percentage change in the Chief Executive’s remuneration package over the past ten years:
Year ended
31 Mar
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
Name
John Ions
John Ions
John Ions
John Ions
John Ions
John Ions
John Ions
John Ions
John Ions
John Ions
Single figure of total
remuneration (£’000)
Long term incentive vesting rates (as
% maximum opportunity)
6,014
6,648
4,555
4,419
2,191
1,751
1,572
1,544
2,271
2,186
99%
100%
100%
100%
Nil
Nil
Nil
Nil
100%
Nil
6. DIRECTORS’ SHAREHOLDINGS
6.1 Shareholding requirement (audited information) and Fund holding information
A key component of the Company’s remuneration policy is a shareholding requirement of 4 times salary for Executive Directors.
As at 31 March 2022 the Executive Directors and their closely associated persons held:
Executive Directors
Ordinary shares held
Vested but
unexercised options
Value at 31 Mar 2022
(£’000)
John Ions
Vinay Abrol
746,593
900,614
95,372
62,850
10,140
11,888
Multiple of salary
18x
28x
The value of the vested but unexercised options is after income tax and national insurance using basic salaries as at 1 April 2022.
6.2 Directors’ Shareholdings (audited information)
The interests of the Directors and their closely associated persons in the share capital of the Company at 31 March 2022 were
as follows:
Ordinary shares
Unvested
Ordinary
shares
Total
Ordinary
shares
Vested but
unexercised
options
Options subject
to perf. conditions
Total options over
Ordinary shares
Executive Directors
John Ions
Vinay Abrol
Non-executive Directors
Alastair Barbour
Mandy Donald
Emma Howard Boyd
Quintin Price
Rebecca Shelley
George Yeandle
745,366
899,387
1,227
1,227
746,593
900,614
95,372
62,850
229,314
151,112
324,686
213,962
34,175
–
2,500
2,200
–
20,000
–
–
–
–
–
–
34,175
–
2,500
2,200
–
20,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
There were the following changes to the Directors’ interests between 1 April 2022 and 21 June 2022:
• Rebecca Shelley purchased 1,544 Ordinary shares on 6 April 2022.
• John Ions and Vinay Abrol each purchased 156 additional Ordinary shares and were each allocated 312 unvested Ordinary
shares pursuant to their participation in the SIP on 27 April 2022.
Other than the above, there were no other changes.
126 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE SIP Shares (audited information)
Director
John Ions
Vinay Abrol
Awards held start of year
Awards held start of year
Number of
shares as at
1 Apr 2021
Face
value
Grant/Vesting
date
Number of
shares
granted/
(vested)
Number of
shares as at
31 Mar 2022
610
546
336
468
610
546
336
468
£3,600
25-Apr-21
(610)
£3,600
£3,600
£3,600
4-May-21
£3,600
25-Apr-21
345
(610)
£3,600
£3,600
£3,600
4-May-21
345
-
546
336
345
–
546
336
345
Tax year
2018/19
2019/20
2020/21
2021/22
2018/19
2019/20
2020/21
2021/22
Earliest
vesting date
25-Apr-21
30-Apr-22
27-Apr-23
4-May-24
25-Apr-21
30-Apr-22
27-Apr-23
4-May-24
The vesting of SIP shares awarded are subject to continuous performance and claw back conditions. Vested shares may remain
in the SIP after vesting.
6.3 Post-employment shareholding requirements
With effect from 1 April 2020, the Executive Directors are required to maintain their shareholding in the Company at a level equal
to the lower of the shareholding requirement immediately prior to departure or the actual shareholding on departure for at least
two years.
7. OTHER DISCLOSURES AND HISTORICAL INFORMATION
7.1 Remuneration Committee composition and attendance
During the year, the Committee comprised entirely independent Non-executive Directors:
• George Yeandle (Chair)
• Mike Bishop (resigned 23 September 2021)
• Mandy Donald (stepped down 25 March 2022)
• Sophia Tickell (resigned 23 September 2021)
• Quintin Price (appointed 1 July 2021)
• Rebecca Shelley (appointed 1 November 2021)
• Emma Howard-Boyd (appointed 19 January 2021)
The attendance record of members of the Committee during the year is shown in the table on page 95.
127
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE Activities during the year
In the financial year to 31 March 2022, the Committee met seven times and discussed, amongst other things, the subjects
described below:
• approval of the 2021 Remuneration Report;
• review and approval of the bonuses for the Executive Directors for the financial year ended 31 March 2021;
• review and approval of the bonuses for the employees and members (excluding the Executive Directors) for the financial year
ended 31 March 2022;
• approval of salary changes for the senior members of the fund management teams;
• approval of allocations under the Liontrust Company Share Option Plan (“CSOP”) in June 2021;
• approval granting of DBVAP awards for the financial year ended 31 March 2021;
• review and approval of the Bonus Methodology, deferral methodology and Metrics for the financial year ending 31 March
2022;
• approval of LTIP allocation for the financial year ending March 2022 for the Executive Directors and key executives;
• reviewing regular reports from HR and Compliance;
• approval of the vesting of the 2019 LTIPs granted in June 2018;
• review of proxy voting agency and shareholder comments and feedback on the new DRP;
• review of bonus/remuneration capping and bonus performance metrics for the year ended 31 March 2022;
• review of the bonus methodology, related Executive Director remuneration and market practices on Executive Director
remuneration;
• approval of Director, employee and member appraisal process for the financial year ended 31 March 2022; and
• review and approval of relevant Group policies, in particular the enhanced Maternity and Paternity policies.
7.2 Service Contracts
The Director service contracts (Director appointment letter and limited liability partnership (“LLP”) Deed of Adherence) are as follows:
Director
Type of contract
Date of contract
Notice period
Executive Directors
John Ions
Director Letter of appointment
23 January 2014
LLP membership deed of adherence
8 July 2010
Vinay Abrol
Director Letter of appointment
23 January 2014
LLP membership deed of adherence
8 July 2010
Non-executive Directors
Alastair Barbour
Director Letter of appointment
19-Nov-19
Mandy Donald
Director Letter of appointment
Emma Howard Boyd
Director Letter of appointment
Quintin Price
Director Letter of appointment
Rebecca Shelley
Director Letter of appointment
George Yeandle
Director Letter of appointment
18-Jul-19
19-Jan-22
01-Jul-21
01-Nov-21
16-Dec-14
6 months
6 months
12 months
12 months
3 months
3 months
3 months
3 months
3 months
3 months
128 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE 7.3 Compensation for loss of office (audited information)
No payments for loss of office were made during the financial year ended 31 March 2022 (2021: Nil).
7.4 Payments to former Directors (audited information)
There have been no payments to former Directors and no payment for loss of office.
7.5 Dilution and employee benefit trust
Our policy regarding dilution from employee share awards and member incentivisation has been, and will continue to be, to
ensure that dilution will be no more than 10% in any rolling ten-year period.
The Committee intends to utilise the Company’s existing discretionary employee benefit trust (the “Employee Trust”) to reduce and
manage dilution.
The Employee Trust will have full discretion about the application of the trust fund (subject to recommendations from the Committee).
The Company will be able to fund the Employee Trust to acquire shares in the market and/or to subscribe for shares at nominal
value in order to satisfy option awards granted under the LTIP and Liontrust CSOP. Any shares issued to the Employee Trust in order
to satisfy awards will be treated as counting towards the dilution limit. For the avoidance of doubt, any shares acquired by the
Employee Trust in the market will not count towards these limits. Share awards under the SIP and Liontrust Company Share Option
Plan CSOP are satisfied by market purchased shares, so have no dilutive effect.
7.6 Shareholder voting outcomes for 2020 Directors’ Remuneration Report
The table below shows the advisory vote on the 2021 Directors’ Remuneration Report at the Annual General Meeting held on 23
September 2021:
2021 Annual report on
remuneration
Votes for
%
Votes against
40,077,908
90.55
4,183,385
%
9.45
Votes withheld
969,314
7.7 Shareholder voting outcomes for 2022 Directors’ Remuneration Report and 2022 Directors’ Remuneration Policy
The table below shows the advisory vote on the 2022 Directors’ Remuneration Report (DRP) at the Annual General Meeting held
on 16 February 2022:
Directors’ remuneration
policy
Votes for
%
Votes against
%
Votes withheld
24,896,831
54.06
21,155,267
45.94
520,989
The DRP, as approved by shareholders at our February 2022 GM, remains appropriate and no changes are proposed this year.
7.8 Advisers
The Committee invites individuals to attend meetings as it deems beneficial to assist it in reviewing matters for consideration. During
the year, these individuals included the Chair of the Company, the Chief Executive, the Chief Financial Officer & Chief Operating
Officer and the Company Secretary.
In the performance of its duties, the Committee can seek assistance from external advisers. At the January 2021 meeting of the
Committee the approved the appointment of PricewaterhouseCoopers LLP to conduct a review of Executive Director remuneration.
7.9 Compliance with the FCA Remuneration Code and the UK Corporate Governance Code
During the reporting period, Liontrust was subject to the FCA’s BIPRU, UCITs and AIFM remuneration codes and the Committee
ensured these were appropriately reflected in the Remuneration Policy and adhered to on an ongoing basis. As of 1st April 2022,
Liontrust was no longer subject to BIPRU remuneration requirements and instead covered by MIFIDPRU SYSC 19G remuneration rules,
following implementation of the FCA’s Investment Firms Prudential Regime (IFPR). The Company has followed the requirements of the
UK Corporate Governance Code.
129
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE
7.10 Historical Information
LTIP Awards (audited information)
Directors
John Ions
Financial year
ended 31-Mar
Face value
Share
price
used to
determine
the award
Number of
options
held
at 1 Apr
2021
Options
forfeit
Options
granted
or exercised
Number of
options
held at
31 March
2022
Exercise
Price
End of
performance
period
Date of
grant
2017
£828,750
280.6p
59,070
(in respect of
2017/18/19)
2018
£828,750
450.2p
73,628
–
–
(in respect of
2018/19/20)
(59,071)
–
Nil
5-Sep-16 10-Aug-19
(36,814)
36,814
Nil
22-Jun17
22-Jun20
2019
£870,250
589.6p
147,607
(1,210)
(87,839)
58,558
Nil
26-Jun-18
26-Jun-21
(in respect of
2019/20/21)
2020
£870,250
762.0p
114,206
(in respect of
2020/21/22)
2021
£870,250
1410.0p
61,719
(in respect of
2021/22/23)
2022
£870,250
1,630.0p
–
(in respect of
2022/23/24)
Vinay Abrol
2017
£546,175
280.6p
38,929
(in respect of
2017/18/19)
2018
£546,175
450.2p
48,524
(in respect of
2018/19/20)
–
–
–
–
–
– 114,206
Nil 12-Aug-19 12-Aug-22
–
61,719
Nil
8-Jul-20
8-Jul-23
53,389
53,389
Nil
23-Jun-21
23-Jun-24
(38,929)
–
Nil
5-Sep-16 10-Aug-19
(24,262)
24,262
Nil
22-Jun17
22-Jun20
2019
£573,475
589.6p
97,270
(798)
(57,884)
38,588
Nil
26-Jun-18
26-Jun-21
(in respect of
2019/20/21)
2020
£573,475
762.0p
75,259
(in respect of
2019/20/21)
2021
£573,475
1410.0p
40,671
(in respect of
2021/21/23)
2022
£573,475
1,630.0p
–
(in respect of
2022/23/24)
–
–
–
–
75,259
Nil 12-Aug-19 12-Aug-22
–
40,671
Nil
8-Jul-20
8-Jul-23
35,182
35,182
Nil
23-Jun-21
23-Jun-24
The face value of the option grants is equivalent to 250% and 175% of base annual remuneration for John Ions and Vinay Abrol
respectively. The share price used to determine the award is the 30 day average closing share price prior to the Remuneration
Committee meeting that approved the granting of the awards. Performance measures are attached to options granted, which are
total shareholder return (40%), earnings per share (30%) and other strategic objectives (30%) which include net inflows, growth
in assets under management, fund performance and other strategic measures. For threshold performance, 20% of the LTIP awards
will vest. Claw back and malus provisions apply, see DRP elements of reward table for further details.
130 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE LTIP Performance Conditions
Financial year ended 31 March 2020 (in respect of
2020/21/22) granted 12 August 2019:
Absolute Shareholder Return target (20%)
Performance condition: TSR performance (% growth per
annum): Below 10% per annum then nil vests, at 10% per
annum growth 10% vests and at 15% per annum and above
100% vests. Straight line vesting between 10% per annum and
15% per annum growth.
Required outcome: Start of the performance period: on 12
August 2019, with the starting share price being 780.73p,
which is the 30-day average to the day before the date of
grant. The end of the performance period: 12 August 2022.
Relative Shareholder Return target (20%)
Performance condition: Relative performance vs the FTSE All-
Share Index Total Return (% growth per annum in excess of the
index return): Below 10% per annum then nil vests, at 10% per
annum growth 10% vests and at 15% per annum and above
100% vests. Straight line vesting between 10% per annum and
15% per annum growth.
Required outcome: Using the same starting price as above,
performance will be assessed against FTSE All Share Total
Return Index (starting index value 7494.08. which is the 30-
day average to the day before the date of grant). The end of
the performance period: 12 August 2022.
EPS target (30%)
Performance condition: EPS growth per annum: Below 10%
per annum then nil vests, at 10% per annum growth 20% vests
and at 15% per annum and above 100% vests. Straight line
vesting between 10% per annum and 15% per annum growth.
Required outcome: Starting EPS (Diluted Adjusted EPS
excluding performance fees): 46.87p for the financial year
ending 31 March 2019. End of the performance period is
31 March 2022.
Strategic targets (30%)
Performance condition 1 (7.5%): Net inflows compared to
target (25% of Strategic targets portion): Below 75% of target
nil vests, at 75% of target 20% vests.
Financial year ended 31 March 2021 (in respect of
2021/22/23) granted 8 July 2020:
Absolute Shareholder Return target (20%)
Performance condition: TSR performance (% growth per
annum): Below 10% per annum then nil vests, at 10% per
annum growth 10% vests and at 15% per annum and above
100% vests. Straight line vesting between 10% per annum and
15% per annum growth.
Required outcome: Start of the performance period: on 8 July
2020, with the starting share price being 1,356.33p, which
is the 30-day average to the day before the date of grant. The
end of the performance period: 8 July 2023.
Relative Shareholder Return target (20%)
Performance condition: Relative performance vs the FTSE All-
Share Index Total Return (% growth per annum in excess of the
index return): Below 10% per annum then nil vests, at 10% per
annum growth 10% vests and at 15% per annum and above
100% vests. Straight line vesting between 10% per annum and
15% per annum growth.
Required outcome: Using the same starting price as above,
performance will be assessed against FTSE All Share Total
Return Index (starting index value 6,531.22. which is the 30-
day average to the day before the date of grant). The end of
the performance period: 8 July 2023.
EPS target (30%)
Performance condition: EPS growth per annum: Below 10%
per annum then nil vests, at 10% per annum growth 10% vests
and at 15% per annum and above 100% vests. Straight line
vesting between 10% per annum and 15% per annum growth.
Required outcome: Starting EPS (Diluted Adjusted EPS
excluding performance fees): 56.21p for the financial year
ending 31 March 2020. End of the performance period is
31 March 2023.
Strategic targets (30%)
Performance condition 1 (15%): Net inflows compared to
target (25% of Strategic targets portion): Below 75% of target
nil vests, at 75% of target 20% vests and at 125% of target
and above 100% vests. Straight line vesting between 75% of
target and 125% per annum growth.
Required outcome: Starting year for net inflows: Year ending
31 March 2021. Ending year for net inflows: Year ending 31
March 2023. Actual target for net inflows are commercially
sensitive and will disclosed after initial vesting in the 2023
Annual Report on Remuneration.
Performance condition 2 (7.5%): Investment performance
(25% of Strategic targets portion): Below 50% of funds in 1st
or 2nd quartile nil vests, at 50% of funds 10% vests and at
75% of funds and above 100% vests. Straight line vesting
between 50% of funds and 75% of funds.
Required outcome: Starting year for investment performance:
Year ending 31 March 2021. Ending year for investment
performance: Year ending 31 March 2022.
Performance condition 3 (7.5%): Other strategic targets.
Required outcome: Actual target for other strategic objectives
are commercially sensitive and will disclosed after initial
vesting in the 2023 Annual Report on Remuneration. However,
include objectives in relation to personal performance, talent
development, product, risk management, compliance and
promoting a compliant culture; and improving gender diversity
in the business.
Details of the awards granted on 23 June 2021 for the
financial year ended 31 March 2022 are on page 122.
131
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE 7.10 Historical Information
DBVAP Awards (audited information)
Directors
John Ions
Vinay Abrol
Financial year
ended 31-Mar
Basis of award
% of annual bonus
2019
(in respect of 2018)
2020
(in respect of 2019)
2021
(in respect of 2020)
2022
(in respect of 2021)
2019
(in respect of 2018)
2020
(in respect of 2019)
2021
(in respect of 2020)
2022
(in respect of 2021)
61%
61%
80%
69%
50%
50%
80%
69%
Face value
Issue date
Exercise dates
£1,104,000
28 June 2018
28 June 2019/20/21
£870,000
27 June 2019
27 June 2020/21/22
£1,392,000
8 July 2020
8 July 2021/22/23
£1,915,000
22 June 2021
22 June 2022/23/24
£525,000
28 June 2018
28 June 2019/20/21
£492,000
27 June 2019
27 June 2020/21/22
£786,000
8 July 2020
8 July 2021/22/23
£1,085,000
22 June 2021
22 June 2022/23/24
The DBVAP awards nil price options over shares/units in a portfolio of Liontrust Group managed funds. The share/unit price
used to determine the number of shares/units which shall be subject to the option grant is calculated using the unit price on the
date of grant. The portfolio of funds each year is determined by the Remuneration Committee. A minimum of 50% of the annual
bonus is deferred into the DBVAP scheme with higher levels of deferral at the discretion of the Remuneration Committee. No further
performance conditions apply to DBVAP awards as in determining the original annual bonus, the Committee is satisfied that
performance objectives have been met. One third of the awards are exercisable on the exercise dates noted.
132 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE 133
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE 8. DIRECTORS’ REMUNERATION POLICY
This section of the Remuneration Report provides an overview of the key remuneration elements in place for Executive Directors. After
the support received from shareholders at the February 2022 GM at which the revised Directors’ Remuneration Policy (the “DRP”)
was approved, we have not made any changes to our DRP and as such remain bound by the DRP. We have not reproduced the full
DRP in this report. The summary below presents our approved Elements of Reward table for Executive Directors’ and Non-executive
Directors’ for reference. A copy of our full DRP as approved by shareholders can be found in the February 2022 Notice of General
Meeting, available on our website: www.liontrust.co.uk in the Investor Relations/Governance/Governance Policies section.
8.1 Elements of Reward
The following table summarises each of the elements of Liontrust’s total compensation package and the ongoing remuneration
policy for the Executive Directors:
Objective and Link to strategy
Operation
Maximum opportunity
Performance measures and assessment
Base salary
To provide a satisfactory base salary within a total
package comprising base salary and bonus.
Annual bonus
The level of base salary reflects the value of the
individual, their role, skills and experience. It is also
designed to attract and retain talent in the market in
which the individual is employed and/or a member.
The annual bonus rewards good performance of the
Group and individual Executive Directors and is based
on a balanced scorecard of financial and non-financial
measures which align with the performance and delivery
of annual objectives.
Deferral ensures a link to longer term performance and
risk management and aligns the interests of Executive
Directors with those of shareholders.
Salaries are reviewed annually and become effective
in April taking account of market levels, corporate
performance, individual performance subject to the
maximum increase set out on the right.
Reference is made to the median level within the FTSE 250
and FTSE 250 FS.
Executive Directors are eligible to participate in the annual
bonus at the discretion of the Remuneration Committee.
The performance period for the annual bonus will be 1
April - 31 March each year.
Performance measures and weightings are determined
annually but will include a mix of financial and non-
financial measures.
Awards may be deferred into Liontrust shares and/or funds.
Deferral will be in line with current regulatory landscape,
with a minimum 50% deferral, vesting annually over
three years (subject to a continuing employment and/or
membership requirement).
Deferral will automatically be made into Liontrust shares
unless the shareholding is greater than 1,000% of base
salary in which case, executives can elect to defer into
funds.
Where required by regulation, the element of the bonus
deferred into shares and/or funds may be subject to a
retention period after the awards vests.
Dividend equivalents may be awarded on deferred shares
in respect of dividends paid during the deferral period.
The Committee will ensure that the percentage of any annual
Not applicable.
increases in base salary will be no more than the average
percentage increase for the wider workforce for that year.
Chief Executive: Maximum award is 450% of base salary.
Awards are subject to continued employment and a balanced
CFO/COO: Maximum award is 350% of base salary.
scorecard of measures, with assigned weightings and targets set each
year. A mix of financial and non-financial criteria will be used each year
and may include financial, strategic, operational and ESG measures.
Financial measures will account for at least 50% of the annual bonus.
Payout at target performance will be set at 50% of maximum award
while payout at entry level performance will be set at 10% of maximum
award.
Individual risk and compliance behaviour is also considered in detail for
relevant roles and factored into the assessment of performance and the
determination of the bonus awarded
Discretion may be exercised in cases where the Committee believes that
the bonus outcome is not a fair and accurate reflection of business
performance. The exercise of this discretion may result in a downward
or upward adjustment in the amount of the bonus payout resulting from
the application of the performance measures. Any adjustments will be
disclosed in the relevant annual report.
The Committee also retains discretion in exceptional circumstances to
change performance measures and targets part-through a financial year
if there is a significant and material event which causes the Committee
to believe the original measures are no longer appropriate.
Any adjustments of or discretion applied by the Committee will be fully
disclosed in the following year’s Remuneration Report.
134 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE Objective and Link to strategy
Operation
Maximum opportunity
Performance measures and assessment
Base salary
To provide a satisfactory base salary within a total
Salaries are reviewed annually and become effective
package comprising base salary and bonus.
The level of base salary reflects the value of the
individual, their role, skills and experience. It is also
in April taking account of market levels, corporate
performance, individual performance subject to the
maximum increase set out on the right.
designed to attract and retain talent in the market in
Reference is made to the median level within the FTSE 250
which the individual is employed and/or a member.
and FTSE 250 FS.
The Committee will ensure that the percentage of any annual
increases in base salary will be no more than the average
percentage increase for the wider workforce for that year.
Not applicable.
Annual bonus
The annual bonus rewards good performance of the
Executive Directors are eligible to participate in the annual
Chief Executive: Maximum award is 450% of base salary.
Group and individual Executive Directors and is based
bonus at the discretion of the Remuneration Committee.
CFO/COO: Maximum award is 350% of base salary.
on a balanced scorecard of financial and non-financial
measures which align with the performance and delivery
of annual objectives.
Deferral ensures a link to longer term performance and
risk management and aligns the interests of Executive
Directors with those of shareholders.
The performance period for the annual bonus will be 1
April - 31 March each year.
Performance measures and weightings are determined
annually but will include a mix of financial and non-
financial measures.
Awards may be deferred into Liontrust shares and/or funds.
Deferral will be in line with current regulatory landscape,
with a minimum 50% deferral, vesting annually over
three years (subject to a continuing employment and/or
membership requirement).
Deferral will automatically be made into Liontrust shares
unless the shareholding is greater than 1,000% of base
salary in which case, executives can elect to defer into
funds.
Where required by regulation, the element of the bonus
deferred into shares and/or funds may be subject to a
retention period after the awards vests.
Dividend equivalents may be awarded on deferred shares
in respect of dividends paid during the deferral period.
Awards are subject to continued employment and a balanced
scorecard of measures, with assigned weightings and targets set each
year. A mix of financial and non-financial criteria will be used each year
and may include financial, strategic, operational and ESG measures.
Financial measures will account for at least 50% of the annual bonus.
Payout at target performance will be set at 50% of maximum award
while payout at entry level performance will be set at 10% of maximum
award.
Individual risk and compliance behaviour is also considered in detail for
relevant roles and factored into the assessment of performance and the
determination of the bonus awarded
Discretion may be exercised in cases where the Committee believes that
the bonus outcome is not a fair and accurate reflection of business
performance. The exercise of this discretion may result in a downward
or upward adjustment in the amount of the bonus payout resulting from
the application of the performance measures. Any adjustments will be
disclosed in the relevant annual report.
The Committee also retains discretion in exceptional circumstances to
change performance measures and targets part-through a financial year
if there is a significant and material event which causes the Committee
to believe the original measures are no longer appropriate.
Any adjustments of or discretion applied by the Committee will be fully
disclosed in the following year’s Remuneration Report.
135
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE Objective and Link to strategy
Operation
Maximum opportunity
Performance measures and assessment
Long Term Incentive
Plan (“LTIP”)
The annual bonus rewards good performance of the
Group and individual Executive Directors and is based
on a balanced scorecard of financial and non-financial
measures which align with the performance and delivery
of annual objectives.
Deferral ensures a link to longer term performance and
risk management and aligns the interests of Executive
Directors with those of shareholders.
Executive Directors are eligible to participate in the annual
bonus at the discretion of the Remuneration Committee.
The performance period for the annual bonus will be 1
April - 31 March each year.
Performance measures and weightings are determined
annually but will include a mix of financial and non-
financial measures.
Awards may be deferred into Liontrust shares and/or funds.
Deferral will be in line with current regulatory landscape,
with a minimum 50% deferral, vesting annually over
three years (subject to a continuing employment and/or
membership requirement).
Deferral will automatically be made into Liontrust shares
unless the shareholding is greater than 1,000% of base
salary in which case, executives can elect to defer into
funds.
Where required by regulation, the element of the bonus
deferred into shares and/or funds may be subject to a
retention period after the awards vests.
Dividend equivalents may be awarded on deferred shares
in respect of dividends paid during the deferral period.
The maximum number of shares subject to the three annual LTIP
The vesting of awards is subject to continued employment and
awards which may be granted under this Policy is:
achievement of performance conditions linked closely to financial
For the Chief Executive, annual awards of shares equal to 0.25%
(a total of 0.75%) of the issued share capital on the date of the
The current performance measures are:
performance and shareholder return as set out below.
adoption of the LTIP.
CFO/COO, annual awards of shares equal to 0.18% (a total of
Trusts) (“TSR”) with a 40% weighting; and
i) relative total shareholder return vs. FTSE 250 (Excluding Investment
0.55%) of the issued share capital on the date of the adoption
of the LTIP.
ii) adjusted earnings per share excluding performance fees (“EPS”)
with a 60% weighting.
Entry level performance payout at 10% of maximum (for relative TSR this
will be median).
Target payout of 50% of stretch performance applies to EPS measure
(for relative TSR will be straight line vesting between entry level and
stretch performance, where stretch performance equates to upper
quintile performance).
In line with the UK Corporate Governance Code the Committee has
the discretion to adjust formulaic outcomes on the LTIP to reflect overall
corporate performance. Any adjustments of or discretion applied by the
Committee will be fully disclosed in the following year’s Remuneration
Report.
Shareholding
requirement
The employee shareholding requirement aligns the
interests of Executive Directors with those of shareholders.
The employee shareholding requirement is 500% of base
salary for all Executive Directors.
Not applicable.
Not applicable.
The post-employment shareholding requirement further
aligns the interests of Executive Directors with those of
shareholders and encourages the Executive Directors to
focus on sustainable long-term performance.
Share Incentive Plan
(“SIP”)
The SIP allows the Executive Directors to purchase
Company shares with a matching element, to build up
an interest in Company shares and increase alignment of
interests with shareholders.
Benefits
To provide benefits which are appropriately competitive.
In addition to personally owned shares, any unvested
shares which are not subject to performance conditions
(such as shares deferred under the annual bonus) and
vested shares subject to a holding period will count towards
the shareholding requirement, net of tax.
In the case of incoming Executive Directors the shareholding
requirement must be met within five years of an Executive
Director’s appointment.
The post-employment shareholding requirement is to
continue to hold for a period of two years after cessation
the lower of the i) shareholding requirement immediately
prior to cessation or ii) actual shareholding on cessation.
An all-employee HMRC approved share plan that allows
the Executive Directors to purchase shares, in a tax efficient
manner and subject to limits, which are matched by the
Company. In line with the normal operation of a SIP
envisaged by HMRC, there are no performance conditions
on matching shares.
Executive Directors are entitled to a range of benefits
including:
• Private Medical Insurance
• Life Insurance;
• Disability Assurance;
• Travel Insurance; and
• access to an Employee/Member Assistance Programme
Where relocation payments or allowances are paid it will
be limited to 50% of salary.
Up to a maximum of £1,800 to purchase Partnership Shares which
Not applicable.
are matched by the Company on a 2 for 1 basis.
The maximum opportunity for other benefits is defined by the
Not applicable.
nature of the benefit itself and the cost of providing it. As the cost
of providing such insurance benefits varies according to premium
rates and the cost of other benefits is dependent on market rates
and other factors, there is no formal maximum monetary value.
Pension
To provide competitive levels of retirement benefit aligned
with the wider workforce.
Executive Directors’ pension contributions are made at 10%
of base salary into the Liontrust Group Pension Plan.
Executive Directors have the choice of taking an equivalent
cash payment in lieu of pension contributions.
The maximum percentage that the Executive Directors can receive as
a pension contribution or cash equivalent payment is 10% of base
salary.
136 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE Objective and Link to strategy
Operation
Maximum opportunity
Performance measures and assessment
Long Term Incentive
The annual bonus rewards good performance of the
Executive Directors are eligible to participate in the annual
Plan (“LTIP”)
Group and individual Executive Directors and is based
bonus at the discretion of the Remuneration Committee.
on a balanced scorecard of financial and non-financial
measures which align with the performance and delivery
of annual objectives.
Deferral ensures a link to longer term performance and
risk management and aligns the interests of Executive
Directors with those of shareholders.
The maximum number of shares subject to the three annual LTIP
awards which may be granted under this Policy is:
For the Chief Executive, annual awards of shares equal to 0.25%
(a total of 0.75%) of the issued share capital on the date of the
adoption of the LTIP.
CFO/COO, annual awards of shares equal to 0.18% (a total of
0.55%) of the issued share capital on the date of the adoption
of the LTIP.
The vesting of awards is subject to continued employment and
achievement of performance conditions linked closely to financial
performance and shareholder return as set out below.
The current performance measures are:
i) relative total shareholder return vs. FTSE 250 (Excluding Investment
Trusts) (“TSR”) with a 40% weighting; and
ii) adjusted earnings per share excluding performance fees (“EPS”)
with a 60% weighting.
Entry level performance payout at 10% of maximum (for relative TSR this
will be median).
Target payout of 50% of stretch performance applies to EPS measure
(for relative TSR will be straight line vesting between entry level and
stretch performance, where stretch performance equates to upper
quintile performance).
In line with the UK Corporate Governance Code the Committee has
the discretion to adjust formulaic outcomes on the LTIP to reflect overall
corporate performance. Any adjustments of or discretion applied by the
Committee will be fully disclosed in the following year’s Remuneration
Report.
Shareholding
requirement
interests of Executive Directors with those of shareholders.
salary for all Executive Directors.
The employee shareholding requirement aligns the
The employee shareholding requirement is 500% of base
Not applicable.
Not applicable.
The post-employment shareholding requirement further
In addition to personally owned shares, any unvested
aligns the interests of Executive Directors with those of
shares which are not subject to performance conditions
shareholders and encourages the Executive Directors to
(such as shares deferred under the annual bonus) and
focus on sustainable long-term performance.
vested shares subject to a holding period will count towards
Share Incentive Plan
The SIP allows the Executive Directors to purchase
An all-employee HMRC approved share plan that allows
(“SIP”)
Company shares with a matching element, to build up
the Executive Directors to purchase shares, in a tax efficient
an interest in Company shares and increase alignment of
manner and subject to limits, which are matched by the
interests with shareholders.
Company. In line with the normal operation of a SIP
envisaged by HMRC, there are no performance conditions
on matching shares.
Benefits
To provide benefits which are appropriately competitive.
Executive Directors are entitled to a range of benefits
Up to a maximum of £1,800 to purchase Partnership Shares which
are matched by the Company on a 2 for 1 basis.
Not applicable.
The maximum opportunity for other benefits is defined by the
nature of the benefit itself and the cost of providing it. As the cost
of providing such insurance benefits varies according to premium
rates and the cost of other benefits is dependent on market rates
and other factors, there is no formal maximum monetary value.
Not applicable.
Pension
To provide competitive levels of retirement benefit aligned
Executive Directors’ pension contributions are made at 10%
with the wider workforce.
of base salary into the Liontrust Group Pension Plan.
The maximum percentage that the Executive Directors can receive as
a pension contribution or cash equivalent payment is 10% of base
salary.
The performance period for the annual bonus will be 1
April - 31 March each year.
Performance measures and weightings are determined
annually but will include a mix of financial and non-
financial measures.
Awards may be deferred into Liontrust shares and/or funds.
Deferral will be in line with current regulatory landscape,
with a minimum 50% deferral, vesting annually over
three years (subject to a continuing employment and/or
membership requirement).
Deferral will automatically be made into Liontrust shares
unless the shareholding is greater than 1,000% of base
salary in which case, executives can elect to defer into
funds.
Where required by regulation, the element of the bonus
deferred into shares and/or funds may be subject to a
retention period after the awards vests.
Dividend equivalents may be awarded on deferred shares
in respect of dividends paid during the deferral period.
the shareholding requirement, net of tax.
In the case of incoming Executive Directors the shareholding
requirement must be met within five years of an Executive
Director’s appointment.
The post-employment shareholding requirement is to
continue to hold for a period of two years after cessation
the lower of the i) shareholding requirement immediately
prior to cessation or ii) actual shareholding on cessation.
including:
• Private Medical Insurance
• Life Insurance;
• Disability Assurance;
• Travel Insurance; and
• access to an Employee/Member Assistance Programme
Where relocation payments or allowances are paid it will
be limited to 50% of salary.
Executive Directors have the choice of taking an equivalent
cash payment in lieu of pension contributions.
137
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022GOVERNANCE 8.2 Non-Executive Directors
The following table summarises each of the elements of Liontrust’s total compensation package and the ongoing remuneration
policy for the Non-executive Directors:
Fees
Objective and Link
to strategy
To provide a market
competitive level
of Non-Executive
Director fees which is
sufficient to attract and
retain individuals with
appropriate knowledge
and experience to
review and support the
implementation of the
Group’s strategy.
George Yeandle
Chair of the Remuneration Committee
21 June 2022
Operation
Maximum opportunity
and assessment
Performance measures
Not applicable.
Non-Executive Chair
fees are capped at
£210,000.
Other Non-Executive
Director fees are capped
at £150,000.
Fee increases are
determined by
reference to individual
responsibilities, inflation
and an appropriate
comparator group.
Non-Executive Director
fees (including the Non-
Executive Chair) are
reviewed annually with
changes effective from
April. The annual fees
comprise the following
elements: Base Fee and
Additional fees, which
may also apply in respect
of Senior Independent
Director status, committee
Chairship and committee
membership.
The policy is to position
Non-Executive Director
fees at, generally, around
what the Executive
Directors and Chair of
the Board believe is
median in the market for
a company of similar
size and complexity from
the FTSE 250 FS. This
may also include fees for
membership/ Chairship
of subcommittees of the
Board or other Group
committees.
The Executive Directors
and Chair of the Board
are responsible for
setting the remuneration
of the Non-Executive
Directors. The Chair of the
Board’s fee is set by the
Remuneration Committee.
Non-Executive Directors
do not participate in any
variable remuneration
element.
138 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
GOVERNANCE FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Cash Flow Statement
Consolidated Statement of Changes in Equity
Notes to the Financial Statements
Liontrust Asset Management Plc Financial Statements
Liontrust Asset Management Plc Notes to the
Financial Statements
Independent auditor’s report to the members of Liontrust
Asset Management PLC
Shareholder Information
140
141
142
143
144
174
177
184
192
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2022
Revenue
Cost of sales
Gross profit
Realised profit on sale of financial assets
Unrealised gain on financial assets
Administration expenses
Operating profit
Interest receivable
Interest payable
Profit before tax
Taxation
Profit for the year
Other comprehensive income:
Total comprehensive income
Earnings per share
Basic earnings per share
Diluted earnings per share
Note
4
4
5
6
8
16
10
Year ended
31-Mar-22
£’000
245,571
(14,252)
231,319
–-
26
Year ended
31-Mar-21
£’000
175,080
(11,321)
163,759
250
672
(151,916)
(129,646)
79,429
35,035
4
(142)
79,291
(20,088)
59,203
7
(113)
34,929
(7,257)
27,672
59,203
27,672
Pence
Pence
12
12
97.65
97.61
47.02
46.25
The notes on pages 144 to 175 form an integral part of these consolidated financial statements.
140 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
as at 31 March 2022
Assets
Non current assets
Intangible assets
Goodwill
Property, plant and equipment
Total non current assets
Current assets
Trade and other receivables
Financial assets
Cash and cash equivalents
Total current assets
Liabilities
Non current liabilities
Deferred tax liability
Lease liability
Total non current liabilities
Current liabilities
Trade and other payables
Corporation tax payable
Total current liabilities
Net current assets
Net assets
Shareholders’ equity
Ordinary shares
Share premium
Capital redemption reserve
Retained earnings
Own shares held
Total equity
As at
31-Mar-22
£’000
As at
31-Mar-21
£’000
Note
15
16
17
18
1(j)
11
16
75,171
27,577
3,658
84,812
27,577
5,257
106,406
117,646
235,496
289,805
4,168
120,852
360,516
2,188
71,898
363,891
(16,601)
(2,775)
(19,376)
(13,436)
(3,418)
(16,854)
19
(255,669)
(298,007)
(7,709)
(3,288)
(263,378)
(301,295)
97,138
184,168
62,596
163,388
20
23
612
64,370
19
128,859
(9,692)
184,168
610
64,370
19
104,207
(5,818)
163,388
The notes on pages 144 to 175 form an integral part of these consolidated financial statements.
The financial statements on pages 140 to 175 were approved and authorised for issue by the Board of Directors on 21 June 2022
and signed on its behalf by V.K. Abrol, Chief Operating Officer and Chief Financial Officer.
Company Number 2954692
141
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 March 2022
Cash flows from operating activities
Cash received from operations
Cash paid in respect of operations
Net cash generated from changes in unit trust receivables and payables
Net cash generated from operations
Interest received
Tax paid
Net cash generated from operating activities
Cash flows from investing activities
Purchase of property and equipment
Acquisition of Architas net of cash required
Purchase of DBVAP Financial Asset
Sale DBVAP Financial Asset
Purchase of Seeding investments
Sale of Seeding investments
Net cash used in investing activities
Cash flows from financing activities
Payment of lease liabilities
Purchase of own shares
Sale of own shares
Issue of new shares
Dividends paid
Net cash (used in)/generated from financing activities
Net increase in cash and cash equivalents
Opening cash and cash equivalents
Closing cash and cash equivalents
Cash and cash equivalents consist only of cash balances.
As at
31-Mar-22
£’000
As at
31-Mar-21
£’000
Note
219,544
(112,949)
(508)
106,087
4
(12,500)
93,591
(507)
–
(3,125)
1,183
(170)
84
(2,535)
(1,889)
(5,000)
–
–
(35,213)
(42,102)
48,954
71,898
120,852
16
9
141,409
(95,913)
4,554
50,050
7
(6,416)
43,641
(254)
(54,124)
–
1,334
(117)
–
(53,161)
(2,263)
(812)
852
64,421
(21,074)
41,124
31,604
40,294
71,898
The notes on pages 144 to 175 form an integral part of these consolidated financial statements.
142 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2022
Ordinary
shares
£ ‘000
Share
premium
£ ‘000
Capital
redemption
£ ‘000
Retained
earnings
£ ‘000
Own
shares held
£ ‘000
Note
Total
Equity
£ ‘000
Balance at 1 April 2021 brought forward
610
64,370
19
104,207
(5,818)
163,388
Profit for the year
Total comprehensive income for the year
Dividends paid
Shares issued
Purchase of own shares
Sale of own shares
Equity share options issued
Balance at 31 March 2022
–
–
–
2
–
–-
–
–
–
–
–-
–
–
–
–
–
–
–-
–
–
–
59,203
59,203
(35,947)
(2)
–
–
–
–
–-
59,203
59,203
(35,947)
–-
(5,000)
(5,000)
(1,042)
1,126
2,440
–
84
2,440
612
64,370
19
128,859
(9,692)
184,168
9
20
23
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2021
Balance at 1 April 2020 brought forward
555
57,439
19
37,888
(5,862)
Ordinary
shares
£ ‘000
Share
premium
£ ‘000
Capital
redemption
£ ‘000
Retained
earnings
£ ‘000
Own
shares held
£ ‘000
Note
Profit for the year
Total comprehensive income for the year
Dividends paid
Capital reorganisation
Shares issued
Sale/(purchase) of own shares
Equity share options issued
Deferred tax on option charge taken to equity
Share options settled
Balance at 31 March 2021
9
21
20
23
11
–
–
–
–
–
–
–
(57,439)
55
64,370
–
–
–
–
–
–
–
–
–
–
–
–
–
–
27,672
27,672
(21,074)
57,439
-
-
2,636
164
(518)
–
–
–
–
–
44
–
–
Total
Equity
£ ‘000
90,039
27,672
27,672
(21,074)
–
64,425
44
2,636
164
(518)
610
64,370
19
104,207
(5,818)
163,388
The notes on pages 144 to 175 form an integral part of these consolidated financial statements.
143
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
1 PRINCIPAL ACCOUNTING POLICIES
a) Basis of preparation
The consolidated financial statements have been prepared in
accordance with UK-adopted International Financial Reporting
Standards (IFRS) and those parts of the Companies Act 2006
applicable to companies reporting under IFRS.
The preparation of financial statements in conformity with IFRS
requires the directors of the Company to make significant
estimates and judgements that affect the reported amounts of
assets and liabilities and disclosure of contingencies at the
date of the financial information and the reported income
and expense during the reporting periods. Although these
judgements and assumptions are based on the directors’ best
knowledge of the amount, events or actions, actual results may
differ from these estimates. The accounting policies set out
below have been used to prepare the financial information.
All accounting policies have been consistently applied.
The financial information has been prepared based on the
IFRS standards effective as at 31 March 2022. There have
been no significant changes issued to IFRS that would affect
the Group and Company during the year.
b) Going concern
The consolidated financial information presented within
these financial statements has been prepared on a going
concern basis (See ‘Basis of financial statements’ on
page 88) under the historical cost convention (except for
the measurement of financial assets at fair value through
profit and loss and DBVAP liability which are held at their
fair value). The Group is reliant on cash generated by the
business to fund its working capital. The Directors have
assessed the prospects of the Group and parent company
over the forthcoming 12 months, including an assessment of
current trading; budgets, plans and forecasts; the adequacy
of current financing arrangements; liquidity, cash reserves
and regulatory capital; and potential material risks to these
forecasts and the Group strategy. This assessment includes
a review of the ongoing impact of the Covid-19 pandemic
on the business; global geopolitical tensions; other material
current and emerging risks; the acquisition and integration of
Majedie Asset Management; and consideration of a severe
but plausible downside scenarios in which AuMA falls by
20% with nil net sales. The Directors confirm that as a result
of these assessments they have a reasonable expectation that
the Group and parent company will continue to operate and
meet its liabilities as they fall due for at least 12 months from
the date of signing these accounts.
c) Basis of consolidation
Subsidiaries are all entities over which the Group has control.
The Group has control of an entity if, and only if it has all of
the following:
• power over the entity;
• exposure, or rights to, variable returns from its involvement
with the entity; and
• the ability to use its power over the entity to affect its returns.
The Group considers all relevant facts and circumstances
in assessing whether it has power over an entity, including:
the purpose and design of an entity, its relevant activities,
substantive and protective rights, and voting rights and
potential voting rights. There is no fixed minimum percentage
at which the Group consolidates, and each exposure is
reviewed individually.
Subsidiaries comprise operating and holding companies,
partnerships and those funds where the Group acts as fund
manager and which are consolidated as a result of additional
exposure to the variable returns of the funds through seed
investment. Such seed investments are typically small as a
proportion of the aggregate capital of fund and at the date of
the report no investee funds are considered subsidiaries and
consolidated.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated
from the date that control ceases. Uniform accounting
policies are applied across all Group entities. Inter-company
transactions, balances, income and expenses on transactions
between Group entities are eliminated on consolidation.
Profits and losses resulting from inter-company transactions that
are recognised in assets are also eliminated on consolidation.
d) Significant accounting estimates and judgements
The preparation of the financial statements in conformity with
IFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgement in the
process of applying the Group’s accounting policies. Estimates
and judgements used in preparing the financial statements
are periodically evaluated and are based on historical
experience and other factors, including expectations of future
events that are believed to be reasonable. The resulting
accounting estimates may not equal the related actual results.
There are no significant judgements. The Directors make a
number of estimates, these include leases (note l) and share
based payments (note q), neither of which are considered to
be significant. In addition, the Directors make estimates to
support the carrying value of goodwill and intangibles that
arise on acquisition. These estimates are set out below:
Accounting estimates and judgements
(i) Acquisition of Architas Multi-Manager Limited and Architas
Advisory Services Limited (together ‘Architas’) in financial year
ended 31 March 2021:
The consideration paid for Architas is allocated between the
intangible assets related to the future rights to manage the fund
management contracts acquired as part of the business, and
144 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS goodwill, being the excess of the aggregate of the consideration
transferred and the amount recognised for non-controlling interests,
over the net identifiable assets acquired and liabilities assumed.
The significant estimate is in relation to the carrying value of the
intangible asset as a result of the unobservable inputs. Details of
the key assumptions used are provided in note 14.
original purchase price of the asset and the costs attributable to
bringing the asset to its working condition for its intended use.
Leasehold improvements are included at cost and are
depreciated on a straight-line basis over the lower of the
estimated useful life and the remaining lease term.
(ii) Impairment of Goodwill and Intangible assets
Goodwill arising on acquisitions is capitalised in the
consolidated balance sheet. Goodwill is carried at cost less
provision for impairment. The carrying value of goodwill is
not amortised but is tested annually for impairment or more
frequently if any indicators of impairment arise. Goodwill is
allocated to a cash generating unit (CGU) for the purpose of
impairment testing, with the allocation to those CGUs that are
expected to benefit from the business combination in which the
goodwill arose (see note 14).
The costs of acquiring intangible assets such as fund
management contracts are capitalised where it is probable
that future economic benefits that are attributable to the assets
will flow to the Group and the cost of the assets can be
measured reliably. The assets are held at cost less accumulated
amortisation. An assessment is made at each reporting date,
on a standalone basis for each intangible asset, as to whether
there is any indication that the asset in use may be impaired.
If any such indication exists and the carrying value exceeds
the estimated recoverable amount at the time, the assets are
written down to their recoverable amount. The recoverable
amount is measured as the greater of fair value less costs to sell
and value in use. Further information on the impairment testing
and estimates used are contained in note 15.
The fund management contracts relating to the assets acquired
as part of the acquisitions of Alliance Trust Investments Limited,
Neptune
Investment Management Limited and Architas
are recorded initially at fair value and recorded in the
consolidated financial statements as intangible assets, they are
then amortised over their useful lives on a straight-line basis.
Management have determined that the useful life of these
assets is 10 years owing to the nature of the purchasers of the
acquired products. Impairment is tested through measuring the
recoverable amount against the carrying value of the related
goodwill or intangible asset. The recoverable amount is the
higher of the fair value less costs to sell and its value in use.
The Directors assess the value in use using a multi-period excess
earnings model which requires a number of inputs requiring
management estimates, the most significant of which include:
future business performance and growth including fund sales,
redemptions and market growth; terminal growth rates; and
the discount rate. In the current year, significant estimates were
only required for the goodwill and intangible assets in relation
to Architas (see note 14 for further detail).
e) Property, plant and equipment
Property, plant and equipment are stated at historic purchase
cost less accumulated depreciation. The cost includes the
Office equipment is depreciated on a straight-line basis over
the estimated useful life of the asset, which is between three
and ten years.
Computer equipment is depreciated on a straight-line basis
over the estimated useful life of the asset which is three years.
At each reporting date management reviews the assets’ for
indications of impairment, including residual values and useful
lives and will make adjustments if required.
f) Trade and other receivables
Trade and other receivables include prepayments as well
as amounts the Group is due to receive from third parties
in the normal course of business. These include fees as well
as settlement accounts for transactions undertaken. These
receivables are normally settled by receipt of cash. Trade and
other receivables are initially recognised at fair value and then
at amortised cost after deducting provisions for expected credit
losses. The Group applies the IFRS9 simplified approach to
measuring expected credit losses (ECLs) for trade receivables
at an amount equal to lifetime ECLs. The ECLs on trade
receivables are calculated based on actual historic credit
loss experience and is adjusted for forward-looking estimates.
Prepayments arise where the Group pays cash in advance
for services. As the service is provided, the prepayment is
reduced and the operating expenses are recognised in the
Consolidated Statement of Comprehensive Income.
Purchase orders from customers for units in managed funds are
initially recognised as receivables pending receipt of cash to fund
the purchase on a trade date basis. Settlement of the transaction
occurs through exchange of cash for units in the underlying
fund which are received from the registrar in exchange for this
consideration. Correspondingly, redemptions of units in funds
are recognised as payables from trade date until receipt of sales
proceeds from the registrar. This purchase and sale process
and settlement cycle results in significant, but largely offsetting,
receivable and payable balances on the Group balance sheet.
A breakdown of these amounts is provided in notes 17 and 19.
Any balances not settled on due date are segregated within client
money accounts separate from the assets of the Group.
g) Trade and other payables
Trade and other payables (excluding deferred income) represent
amounts the Group is due to pay to third parties in the normal
course of business. These include expense accruals as well as
settlement accounts (amounts due to be paid for transactions
undertaken as noted above). Trade payables are costs that have
been billed. Accruals represent costs, including remuneration, that
are not yet billed or due for payment. They are initially recognised
at fair value and subsequently held at amortised cost.
145
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS h) Financial assets
The Group holds the following assets at fair value through
profit or loss:
For the UK Authorised unit trusts, units are held in the
‘manager’s box’ to facilitate the calculation of daily creations
and cancellations of units. These box positions are not held to
create speculative proprietary positions but are managed in
accordance with specified criteria and authorisation limits. The
units in the ‘manager’s box’ are accounted for on a trade date
basis. These units are valued on a bid price basis.
For the UK ICVCs, the shares held in the ‘manager’s box’ are to
facilitate the calculation of daily creations and cancellations of
shares. These box positions are not held to create speculative
proprietary positions but are managed in accordance with
specified criteria and authorisation limits. The shares in the
‘manager’s box’ are accounted for on a trade date basis.
These shares are valued on a mid-price basis.
Units in Liontrust UK Authorised unit trusts, shares in the sub
funds of the Liontrust Global Funds Plc; and shares in the
Liontrust ICVCs are held by the Liontrust Asset Management
Employee Trust (an Employee Benefit Trust ‘EBT’) in respect of
the Deferred Bonus and Variable Allocation Plan (DVBAP). The
units and shares are accounted for on a trade date basis and
are valued on a mid (unit trust) or bid (ICVC) basis.
The Group assesses at each balance sheet date whether
there is objective evidence that a financial asset or a group of
financial assets is impaired.
i) Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash
equivalents are short-term, highly liquid investments that are
readily convertible to known amounts of cash and which are
subject to an insignificant risk of change in value. Under IFRS
cash and cash equivalents are included in the consolidated
cash flow statement.
j) Own shares
Own shares held by the EBT and The Liontrust Members
Reward Partnership LP are valued at cost and are shown as
a deduction from the Group’s shareholders’ equity. No gains
or losses are recognised in the Consolidated Statement of
Comprehensive Income.
k) Leases
At inception of a contract, the Group assesses whether a
contract is, or contains, a lease. A contract is, or contains,
a lease if the contract conveys the right to control the use
of an identified asset for a period of time in exchange for
consideration.
As a lessee
At commencement or on modification of a contract that contains
a lease component, the Group allocates the consideration
in the contract to each lease component on the basis of its
relative stand-alone prices. However, for the leases of property
the Group has elected not to separate non-lease components
and account for the lease and non-lease components as a
single lease component.
The Group recognises a right-of-use asset (ROU) and a lease
liability at the lease commencement date. The ROU asset is
initially measured at cost. which comprises the initial amount
of the lease liability adjusted for any lease payments made at
or before the commencement date, plus any initial direct costs
incurred and an estimate of costs to dismantle and remove the
underlying asset or to restore the underlying asset or the site on
which it is located, less any lease incentives received.
The ROU asset is subsequently depreciated using the straight-
line method from the commencement date to the end of the
lease term, unless the lease transfers ownership of the underlying
asset to the Group by the end of the lease term or the cost of
the ROU asset reflects that the Group will exercise a purchase
option. In that case the ROU asset will be depreciated over the
useful life of the underlying asset, which is determined on the
same basis as those of property and equipment. In addition, the
ROU asset is periodically reduced by impairment losses, if any,
and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of
the lease payments that are not paid at the commencement
date, discounted using the interest rate implicit in the lease
or, if that rate cannot be readily determined, the Group’s
incremental borrowing rate (IBR). Generally, the Group uses its
IBR as the discount rate.
The Group determines its IBR by obtaining interest rates
from various external financing sources and makes certain
adjustments to reflect the terms of the lease and type of the
asset leased. Lease payments included in the measurement of
the lease liability comprise the following:
• fixed payments, including in-substance fixed payments;
• variable lease payments that depend on an index or a
rate, initially measured using the index or rate as at the
commencement date;
• amounts expected to be payable under a residual value
guarantee; and
• the exercise price under a purchase option that the Group
is reasonably certain to exercise, lease payments in an
optional renewal period if the Group is reasonably certain
to exercise an extension option, and penalties for early
termination of a lease unless the Group is reasonably certain
not to terminate early.
The lease liability is measured at amortised cost using the
effective interest method. It is remeasured when there is a
146 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS 147
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS significant event or change in circumstances that is within
the control of the Group that affects the determination of the
lease term, and therefore in future lease payments. This could
arise from a change in an index or rate, if there is a change
in the Group’s estimate of the amount expected to be payable
under a residual value guarantee, if the Group changes its
assessment of whether it will exercise a purchase, extension
or termination option or if there is a revised in-substance fixed
lease payment. When the lease liability is remeasured in this
way, a corresponding adjustment is made to the carrying
amount of the ROU asset, or is recorded in profit or loss if the
carrying amount of the ROU asset has been reduced to zero.
DBVAP – in accordance with regulatory requirements and
good market practice the Group defers a proportion of senior
employees’ and members’ annual bonuses and variable
allocations over a period of 3 years. At the inception of the
deferral period the company may purchase units in a portfolio
of Liontrust funds to match the future liability arising from these
awards which is recognised in the EBT as a financial asset.
The DBVAP does not have any further performance conditions
but has a continuous service condition. The costs of purchasing
these units is recognised over the vesting period. Further details
are disclosed in the Directors Remuneration Policy Elements of
Reward table on page 124.
l) Income and expenses
Income
Income and expenses are accounted for on an accruals basis
when they become receivable or payable. The Group’s primary
source of revenue is fee income from investment management
activities. These fees are generally based on an agreed
percentage of the valuation of the AuMA and are recognised
as the service is provided and it is probable that the fee will
be received. Contractual rebates payable to customers are
deducted from revenue.
Management and administration fees are earned over a
period of time, and revenue is recognised in the same period
in which the service is performed.
Performance fees are earned in respect of certain contracts only
and are recognised when the fee amount can be estimated
reliably and it is highly probable that it will not be subject
to significant reversal. Performance fees can include terms
that a proportion of the fee earned is deferred until the next
performance fee is payable. As there is no certainty that such
deferred fees will be collectable in future years, the Group’s
accounting policy is to include performance fees in income
only when they become due and collectable.
Revenue is also earned from the net value of sales and
redemptions, and liquidations and creations, of units and
shares in units trusts and open-ended investment companies;
and from the operation of a box of units in the unit trusts (“box
profits”), being the “at risk” trading profit or loss arising from
changes in the valuation of holdings of units in Group Unit
Trusts to help manage client sales into, and redemptions from
the trust. Box profits are recognised as incurred.
Management, administration and performance fees are forms
of variable consideration, however there is no significant
judgement or estimation.
Expenses
Operating expenses represent the Group’s administrative
expenses and are recognised as the services are provided.
Front end fees received and commissions paid on the sales
of units in unitised funds are amortised over the estimated life
of the unit.
m) Taxation
The tax expense for the period comprises current and deferred
tax. Tax is recognised in the income statement, except to the
extent that it relates to items recognised in other comprehensive
income, or directly in equity; in these cases, the related tax is
also recognised in other comprehensive income or directly in
equity.
The current income tax charge is calculated on the basis
of the tax laws enacted, or substantively enacted, at the
balance sheet date in the countries where the company
and its subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes provisions
where appropriate on the basis of amounts expected to be
paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on
temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated
financial statements. However, the deferred income tax is not
accounted for, if it arises from initial recognition of an asset or
liability in a transaction, other than a business combination,
that at the time of the transaction affects neither accounting nor
taxable profit or loss. Deferred income tax is determined using
tax rates and laws that have been enacted, or substantively
enacted, by the balance sheet date and are expected to apply
when the related deferred income tax asset is realised; or the
deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it
is probable that future taxable profit will be available against
which the temporary differences can be utilised.
Deferred income tax assets and liabilities are offset when
there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred income
taxes assets and liabilities relate to income taxes levied by
the same taxation authority on either the taxable entity or
different taxable entities where there is an intention to settle the
balances on a net basis.
148 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS n) Members drawings
Members drawings are paid on account during the period plus
any share of profits paid out after the period end, accounted
for as an expense in the period in which they are incurred.
o) Pensions
The Group operates defined contribution schemes for its
employees. The assets are invested in individual Self Invested
Pension Plan accounts and are held separately from the
Group. The costs of the pension scheme are recognised in
the Consolidated Statement of Comprehensive Income in the
period in which they are incurred. The Group has no further
payment obligations once the contributions have been paid.
p) Employee share options and Member incentive awards
The Group operates a number of equity-settled and cash-
settled, share-based compensation plans, under which the
entity receives services from employees and members as
consideration for equity instruments of the Group. The fair
value of the services received in exchange for the awards is
recognised as an expense, and credited to equity reserves for
equity settled awards, and provisions for cash settled awards,
over the vesting period. For equity settled awards the total
amount to be expensed is determined at the date of grant by
reference to the fair value of the awards granted. For cash
settled awards the amount to be expensed is remeasured at
each balance sheet date. Monte Carlo and Black-Scholes
models have been used to calculate the fair value of the
awards. The models require estimates to be made to determine
the fair value of the awards the most significant of which are
as follows:
Liontrust Long Term Incentive Plan (‘LTIP’) and Liontrust Members
Reward Plan (‘LMRP’) with market based performance
conditions attached: a Monte Carlo simulation model is used
to value the award with the following assumptions having
been made:
• the fair values spread over the vesting period of 3 years with
an exercise price of nil;
• the options are expected to be exercised at the point they
become exercisable;
• the risk-free interest rate has been based on the implied
yield of zero-coupon government bonds (UK strips) with a
remaining term equal to the expected term; and
• the expected volatility is based on the Company’s historical
volatility
Liontrust Long Term Incentive Plan (‘LTIP’) and Liontrust Members
Reward Plan (‘LMRP’) with non-market based performance
conditions attached; Liontrust Company Share Option Plan
(“CSOP”) and Phantom share awards:
• a Black-Scholes model is used to value the award with the
following assumptions having been made:
• the fair value is spread over the vesting period which is 3
years with an exercise price of nil (LTIP/LMRP/Phantom), or
set at the time of issue of the award for CSOP awards;
• the LTIP/LMRP/Phantom awards are expected to be
exercised at the point they become exercisable;
• the CSOP awards are estimated to be exercised at the mid-
point between vest (3 years) and lapse (10 years);
• the risk-free interest rate of has been based on the implied
yield of zero-coupon government bonds (UK strips) with a
remaining term equal to the expected term;
• the expected volatility is based on the Company’s historical
volatility
• dividend yield of nil for LTIP/LMRP/Phantom awards as
dividend equivalents are paid out in shares on vesting of
these awards; and
• dividend yield estimated based on the current expectation
and history of dividends paid for CSOP awards.
• Based on historic experience, no reduction in the expense
has been taken for expected award lapses from employees/
members leaving the Group.
q) Dividends
Interim dividend distributions to the shareholders of the
Company are recognised as a liability in the period during
which they are paid. In the case of final dividends they are
recognised as a liability in the period that they are declared
by the Company in general meeting.
r) Foreign currency gains/losses
Items in the financial statements of each of the Group’s entities
are measured using the currency of the primary economic
environment in which the entity operates (The ‘functional
currency’). The consolidated financial statements are presented
in Sterling (‘£’) which is the Group and Company’s functional
and presentation currency.
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of
the transactions. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the translation
at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the
Consolidated Statement of Comprehensive Income.
s) Share Capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new ordinary shares or
options are shown in equity as a deduction, net of tax, from
the proceeds.
t) Adjusted profit
The Group uses Alternative Performance Measures (‘APMs’)
to present the performance of the Group in a consistent
149
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS manner from year to year and distinguish the performance
of the underlying operations of the business from the impact
of non-recurring items such as acquisitions and non-cash
items. Management consider it appropriate to adjust for
amortisation expenses and acquisition related expenditure
such as professional fees, restructuring costs and severance
compensation related costs. Further, performance fees, also
being non-recurring, are removed from the calculation of Gross
profit excluding performance fees and dividend margin. See
page 30 for further information on the Group’s APMs,
2 FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks: market
risk (including price risk, interest rate risk and foreign exchange
risk), credit risk, liquidity risk and capital risk. The Group’s overall
risk management programme understands the unpredictable
nature of financial markets and seeks to minimise any potential
adverse effects on the Group’s financial performance. The Group
uses a number of analytical tools to measure the state of the
business. The financial review on pages 26 to 29 of the Strategic
Report identifies some of these measures.
a) Market risk
i) Price risk
The Group is exposed to equity securities price risk because
of investments held by the Group and classified on the
consolidated balance sheet as current financial assets (held at
fair value through profit or loss).
The Group holds the following types of investment as assets
held at fair value through profit or loss (see note 18):
Operational investments:
1. units in UK Authorised unit trusts;
2. shares in the sub-funds of Liontrust Global Funds PLC;
3. shares in the sub-funds of Liontrust Investment Funds ICVC;
and
4. shares in the sub-funds of Liontrust Sustainable Funds ICVC.
Investments held by the EBT
1. units in UK Authorised unit trusts; and
2. shares in the sub-funds of Liontrust Sustainable Funds ICVC.
For the UK Authorised unit trusts and the ICVCs, the units and
shares held in the ‘manager’s box’ are to facilitate the calculation
of daily creations and cancellations of units or shares. These
box positions are not held to create speculative proprietary
positions but are managed in accordance with specified criteria
and authorisation limits. The manager’s box for each fund is
reviewed daily. If there is a negative box position then units
or shares are created to bring the box level positive. Three
control levels of the manager’s box exist for each fund and each
level is required to be signed off by progressively more senior
staff. There are clearly defined maximum limits, over which the
manager’s box position cannot exceed.
The units in the ‘manager’s box’ are accounted for on a trade
date basis. These units are valued on a bid price basis and
held at fair value through profit and loss. The shares in the
‘manager’s box’ are accounted for on a trade date basis.
These units are valued on a mid price basis and held at fair
value through profit and loss.
For UK Authorised unit trusts, the units held in the EBT are
selected as part of the DBVAP to align the interests of the
Executive Directors with the wider business. The units are
accounted for on a trade date basis and valued on a bid price
basis and held at fair value through profit and loss.
For the shares in the sub-funds of Liontrust Sustainable Funds
ICVC held in the EBT are selected as part of the DBVAP to
align the interests of the Directors with the wider business. The
shares are accounted for on a trade date basis and valued
on a single price basis and held at fair value through profit
and loss.
The operational investment in the sub-funds of Liontrust Global
Funds PLC, (an Ireland domiciled open ended investment
company) have been undertaken as an investment to aid
incorporation and will be redeemed when the relevant sub
funds grow sufficiently in size. The Group has a regular review
process for the investments which identifies specific criteria to
ensure that investments are within agreed limits.
The Group monitors its investments with respect to its regulatory
capital requirements and reviews its investments’ values with
respect to overall Group capital on a monthly basis.
ii) Cash flow interest rate risk
Interest rate risk is the risk that the Group will sustain losses
from the fair value or future cash flows of adverse movements
in interest bearing assets and liabilities and so reduce
profitability.
The Group holds cash on deposit in GBP. The interest on
these balances is based on floating rates. The Group monitors
its exposure to interest rate movements and may decide to
adjust the balance between deposits on fixed or floating
interest rates or adjust the level of deposits. Management
consider that given current interest rate levels a sensitivity rate
of 1% is appropriate for GBP cash. Following a review of
sensitivity based on average cash holdings during the year
a 1% increase or decrease in the interest rate will cause a
£951,000 increase or a decrease to nil in interest receivable
(2021: £611,000 increase or decrease to nil).
iii) Foreign exchange risk
Foreign exchange risk is the risk that the Group will sustain
losses through adverse movements in currency exchange rates.
The Group’s policy is to hold the minimum currency exposure
required to cover operational needs and, therefore, to convert
foreign currency on receipt.
150 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS The Group is currently exposed to foreign exchange risk in the
following areas: Investments denominated in US Dollars and
Euros and income receivable in Euro and US Dollars, these
amounts are not considered to be material.
Historically, default levels have been insignificant and the
Group’s maximum exposure to credit risk is represented by the
carrying value of its financial assets.
In calculating the sensitivity analysis below it has been assumed
that expenses/income will remain in line with budget in their
relative currencies year on year.
Maximum exposure to credit risk
31-Mar-22
31-Mar-21
Cash and cash equivalents
Trade receivables
120,852
235,496
71,898
289,805
Management consider that a sensitivity rate of 10% is
appropriate given the current level of volatility in the world
currency markets. In respect of investments denominated in
foreign currencies a 10% movement in the UK Sterling vs. the
relevant exchange rate would lead to an exchange gain or
loss as follows:
Sterling vs. Euros - a movement of 10% would lead to a
movement of £15,000 (2021: £12,000).
Sterling vs. US Dollar - a movement of 10% would lead to a
movement of less than £8,000 (2021: less than £8,000).
In respect of Income receivable in Euro a 10% movement in
the exchange rate would result in a movement of £494,000
(2021: £132,000) in the income statement.
In respect of Income receivable in US Dollar a 10% movement
in the exchange rate would result in a movement of £414,000
(2021: £20,000) in the income statement.
b) Credit risk
Credit risk is managed at a Group level. The Group is
exposed to credit risk primarily on its trade receivables and
from its financing activities, including deposits with banks and
financial institutions and other financial instruments.
Fees receivable arise mainly from the Group’s investment
management business and amounts are monitored regularly.
For banks and financial institutions only independently rated
parties with a minimum rating of ‘A-2’ are used and their
ratings are regularly monitored by the Portfolio Risk Committee.
For receivables the Group takes into account the credit quality
of the client and credit positions are monitored. The Group has
three main types of receivables: management and performance
fees, settlement due from investors in its funds and from the funds
themselves for unit/share liquidations. For management and
performance fee receivables, the Group proactively manages
the invoicing process to ensure that invoices are sent out on a
timely basis and has procedures in place to chase for payment
at pre-determined times after the dispatch of the invoice to
ensure timely settlement. For receivables due from investors, the
Group has rigorous procedures to chase investors by phone/
letter to ensure that settlement is received on a timely basis. For
settlement due from the funds for liquidations, the settlement
of these types of receivables are governed by regulation and
are monitored on an exception basis. In all cases, detailed
escalation procedures are in place to ensure that senior
management are aware of any problems at an early stage.
Trade and other receivables also include cancellations of
units/shares in funds and sales of units/shares in funds, title to
which is not transferred until settlement is received.
During the year there have been no losses due to non-payment
of receivables and the Group does not expect any losses from
the credit counterparties as held at the balance sheet date.
151
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS c) Liquidity risk
Prudent liquidity risk management requires the maintenance of sufficient net cash and marketable securities. The Group monitors
rolling forecasts of the Group’s liquidity reserves (comprising readily realisable investments and cash and cash equivalents) on the
basis of expected cash flows.
The Group has categorised its financial liabilities into maturity groupings based on the remaining period at the balance sheet date
to the contractual maturity date. The amounts disclosed in the table below are the contractual undiscounted cash flows.
As at 31 March 2022
Payables
As at 31 March 2021
Payables
Due
within 3
months
255,669
Due
within 3
months
298,120
Due between
3 months
and one year
Due in
over one year
–
2,775
Due between
3 months
and one year
Due in
over one year
–
3,215
d) Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to
provide returns for shareholders and benefits for other stakeholders whilst maintaining an optimal company structure to reduce the
cost of capital and meet working capital requirements.
The Group’s policy is that it and its subsidiaries should have sufficient capital to meet regulatory requirements, keep an appropriate
standing with counterparties and meet working capital requirements at both a Group and subsidiary level. Management reviews
the Group’s assets on a monthly basis and will ensure that operating capital is maintained at the levels required. In order to
maintain or adjust the capital structure the Group may adjust the amounts of dividends paid to shareholders, return capital to
shareholders, issue new shares, buy back shares or sell financial assets which will increase cash and reduce capital requirements.
Regulatory risk capital (unaudited)
Recognised regulatory bodies, such as the FCA in the UK, oversee the activities of a number of the Group’s operating subsidiaries
and impose minimum capital requirements on the subsidiaries. The Group is regulated by the FCA as a UK consolidation Group.
The FCA issued revised rules on capital adequacy following the implementation of the Investment Firm Prudential Regulation (IFPR)
which came into force on 1 January 2022. Having reviewed the rules, Liontrust is subject to the new MIFIDPRU regulations.
The FCA requires the Group to hold more regulatory capital resources than the total capital resource requirement as defined in
the IFPR. The total capital requirement for the Group is made of the Own Funds Requirement (the regulatory minimum) and any
Additional Own Funds Requirement identified during the new Internal Capital Adequacy and Risk Assessment (ICARA) process, a
modified version of the previous Internal Capital Adequacy Assessment Process (ICAAP).
The Own Funds Requirement for the Group is the higher of:
• A) the new IFPR K-Factor Requirement
• B) the Fixed Overhead Ratio (FOR) Requirement
A summary of the Own Funds Requirement for Liontrust is shown in the table below:
Own Funds Requirement
(A) K-Factor Requirement
- Risk-to-Client (sum of K-AUM, K-CMH and K-ASA)
- Risk-to-Market (sum of K-NPR, K-CMG, K-TCD, and K-CON)
- Risk-to-Firm (sum of K-COH and K-DTF)
(B) Fixed Overhead Requirement (FOR)
Own Funds (Capital) Requirement – Higher of (A) and (B)
Liontrust Asset Management Plc
£000’s)
6,978
6,756
–
222
17,018
17,018
152 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS The Group will determine the total capital requirement, referred to as the Overall Financial Threshold Requirement in IFPR rules,
during the first Liontrust ICARA process later this year. The firm will produce annually, or more frequently if there is a fundamental
change to our business. Under the IFPR, the total capital requirement will be determined by the highest of:
• Harms from Ongoing Operations
• Harms from a Wind-Down
The Harms from Ongoing Operations for Liontrust will include material risks of the company such as operational risk, credit risk
and market risk that were quantified in the capital requirement under the previous UK CRR. The Harms from a Wind-Down will
include the impact of our orderly wind-down cost analysis within a stressed market environment. We anticipate the firm’s capital
requirement will be driven by Harms from Ongoing Operations.
The ICARA will also consider other various risks inherent in our business, such as concentration risk across the business, obligations to fund
any deferred benefit schemes, and non-MIFID and/or unregulated activities that the Group is not explicitly holding capital for. The ICARA
process will detail how all risks are being managed to ensure that the risks are tolerable in terms of potential impact, including impact on
our Capital Resource Requirement, should they materialise. The assessment will draw upon the results of existing risk management controls
and reporting and includes scenario analysis and stress testing to assess the Group’s exposure to extreme events.
The preparation of the ICARA will be managed by the Chief Risk Officer alongside the Chief Executive Officer and Chief
Operating Officer / Chief Financial Officer, together with key input from senior managers within the business. The ICARA will be
reviewed and approved by the Audit and Risk Committee and the Group Board.
As at 31 March 2022, the Group has regulatory capital (own funds) resources of £81.4 million (2021: £51.0 million),
significantly in excess of the Group’s total capital requirement, which is all comprised of common equity tier 1 capital such as
retained earnings, ordinary shares and the share premium line items on the balance sheet. During the period the Group and its
subsidiary entities complied with all regulatory capital requirements under the IFPR. In compliance with MIFIDPRU 8.4, the table
below illustrates a composition of regulatory capital (own funds) resources:
Composition of Regulatory Capital
Item
REGULATORY CAPITAL
TIER 1 CAPITAL
COMMON EQUITY TIER 1 CAPITAL
Fully paid up capital instruments
Share premium
Retained earnings
Accumulated other comprehensive income
Other reserves
Adjustments to CET1 due to prudential filters
1
2
3
4
5
6
7
8
9
10 Other funds
11
(-)TOTAL DEDUCTIONS FROM COMMON EQUITY TIER 1
19 CET1: Other capital elements, deductions and adjustments
20 ADDITIONAL TIER 1 CAPITAL
21
22
23
Fully paid up, directly issued capital instruments
Share premium
(-) TOTAL DEDUCTIONS FROM ADDITIONAL TIER 1
24 Additional Tier 1: Other capital elements, deductions and adjustments
25
26
27
28
29
TIER 2 CAPITAL
Fully paid up, directly issued capital instruments
Share premium
(-) TOTAL DEDUCTIONS FROM TIER 2
Tier 2: Other capital elements, deductions and adjustments
Amount (GBP thousands)
81,420
81,420
193,680
611
64,370
128,859
–
19
–
–
112,440
–
–
–
–
–
–
–
–
–
–
–
153
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS
The table below reconciles the composition of regulatory capital in the table above to the audit balance sheet of this report.
Own funds: reconciliation of regulatory own funds to balance sheet in the audited financial statements
Flexible template – rows to be reported in line with the balance sheet included in the audited financial statements of the investment firm.
Columns should be kept fixed, unless the investment firm has the same accounting and regulatory scope of consolidation, in which
case the volumes should be entered in column (a) only.
Figures should be given in GBP thousands unless noted otherwise.
Item
a
Balance sheet as in
published / audited financial
statements 31-Mar-22
c
Cross-reference to
Composition of Regulatory
Capital table
Assets – Breakdown by asset classes according to the balance sheet in the audited financial statements
Intangible assets
Goodwill
Property, plant and equipment
Trade and other receivables
Financial assets
Cash and cash equivalents
Total Assets
Liabilities – Breakdown by liability classes according to the balance sheet in the audited financial statements
Deferred tax liability
Lease liability
Trade and other payables
Corporation tax payable
Total Liabilitiies
75,171
27,577
3,658
235,496
4,168
120,852
465,991
-16,601
-2,775
-255,669
-7,709
-281,823
Shareholders’ Equity – Breakdown by shareholders’ equity classes according to the balance sheet in the audited financial statements
Ordinary shares
Share premium
Retained earnings
Capital redemption reserve
Own shares held
Total Shareholders' Equity
612
64,370
128,859
19
-9,692
184,168
Line 11
Line 11
Line 4
Line 5
Line 6
Line 8
Line 11
154 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS 3 SEGMENTAL REPORTING
The Group operates only in one operating segment – Investment Management.
Management offers different fund products through different distribution channels. All key financial, business and strategic decisions
are made centrally by the Board, which determines the key performance indicators of the Group. The Group reviews financial
information presented at a Group level. The Board, is therefore, the chief operating decision-maker for the Group. The information
used to allocate resources and assess performance is reviewed for the Group as a whole. On this basis, the Group considers itself
to be a single-segment investment management business.
Revenue by location of client
United Kingdom
Europe (ex UK)
Canada
Australia
Year ended
31-Mar-22
£’000
232,191
13,158
24
198
Year ended
31-Mar-21
£’000
166,577
8,278
18
207
245,571
175,080
During the year ended 31 March 2022 the Group had no client contributing more than 10% of total revenue (2021: no client).
4 REVENUE AND COST OF SALES (GROSS PROFIT)
The Group’s main source of revenue is management fees. Management fees are for investment management or administrative
services and are based on an agreed percentage of the AUMA. Initial charges and commissions are for additional administrative
services at the beginning of a client relationship, as well as ongoing administrative costs. Performance fees are earned from some
funds when agreed performance conditions are met.
Revenue
Performance fee revenue
Total revenue
Cost of sales
Gross profit
Total revenue from customers includes:
Year ended
31-Mar-22
£’000
Year ended
31-Mar-21
£’000
232,976
161,388
12,595
245,571
(14,252)
231,319
13,692
175,080
(11,321)
163,759
• Investment management on unit trusts, open-ended investment companies sub-funds, portfolios and segregated account.
• Performance fees on unit trusts, open-ended investment companies sub-funds, portfolios and segregated accounts.
• Fixed administration fees on unit trusts and open-ended investment companies sub-funds.
• Net value of sales and repurchases of units in unit trusts and shares in open-ended investment companies (net of discounts).
• Net value of liquidations and creations of units in unit trusts and shares in open-ended investment companies sub-fund.
• Box profits on unit trusts – the “at risk” trading profit or loss arising from changes in the valuation of holdings of units in Group
Unit Trusts to help manage client sales into, and redemptions from the trust.
• Less contractual rebates paid to customers.
The cost of sales includes:
• Operating expenses including (but not limited to) keeping a record of investor holdings, paying income, sending annual and
interim reports, valuing fund assets and calculating prices, maintaining fund accounting records, depositary and trustee oversight
and fund auditor fees.
• Sales commission paid or payable.
• External investment advisory fees paid or payable.
155
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS
Performance fee revenue:
Performance fee revenue includes some fees that are subject to arrangements whereby fees are deferred from prior periods but
are only recognised and received following another period of outperformance. During the year £12.6 million of such fees were
recognised. In future periods another £2.9 million may be received. As there is no certainty that such deferred fees will be collectable
in future years, the Group’s accounting policy is to include performance fees in income only when they become due and collectable
and therefore the element (if any) deferred beyond 31 March 2022 has not been recognised in the results for the year.
5 ADMINISTRATION EXPENSES
Employee related expenses
Wages and salaries
Social Security costs
Pensions
Share incentivisation expense
DBVAP expense
Severance compensation
Non-employee related expenses
Members drawings charged as an expense
Share incentivisation expense members
Professional services1
Depreciation and Intangible asset amortisation
Other administration expenses
1Includes acquisition and re-organisation related costs for Architas, Neptune and Majedie.
Share incentivisation expense
- Share option expense employees
- Share option NIC expense
- Share incentive plan expense
- Share option related expenses
- Share option expense members
Year ended
31-Mar-22
£’000
Year ended
31-Mar-21
£’000
35,221
25,817
4,539
1,745
3,446
2,405
704
3,508
1,480
4,693
1,656
1,793
48,060
38,947
54,639
1,257
6,920
12,115
28,925
103,856
151,916
41,986
1,471
15,025
7,448
24,769
90,699
129,646
Year ended
31-Mar-22
£’000
Year ended
31-Mar-21
£’000
2,477
3,222
274
380
315
3,446
1,257
4,703
685
388
398
4,693
1,471
6,164
The average number of members and employees of the Group (as calculated on a weighted average basis over the year),
excluding non-executive Directors, was 203 (2021:188). All members and employees are involved in the investment management
business of the Group.
Investment management
Management and operations
Year ended
31-Mar-22
£’000
Year ended
31-Mar-21
£’000
49
87
50
80
156 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS
Sales and Marketing
Non-executive directors
6 OPERATING PROFIT
The following items have been included in arriving at operating profit:
Foreign exchange (losses)/gains
Depreciation
Amortisation of intangible asset
Year ended
31-Mar-22
£’000
Year ended
31-Mar-21
£’000
62
5
203
53
5
188
Year ended
31-Mar-22
£’000
Year ended
31-Mar-21
£’000
(72)
2,474
9,641
(117)
1,894
7,240
Costs relating to Directors, members and employees (Note 5)
103,956
82,404
Auditors remuneration:
Fees payable to the Company’s auditors and its associates for the audit of the parent Company and
consolidated financial statements
Fees payable for subsidiary audits
Fees payable to the Company’s auditors and its associates for other services:
- services pursuant to legislation
- other services
444
80
228
50
423
80
140
–
The Group also pays audit fees for the funds as part of fund expenses costs, the total costs during the year amounted to £522,000,
including £65,000 relating to non audit services (2021: £462,000, no non audit services).
7 ADJUSTED PROFIT
Adjusted profit seeks to exclude the effects of non-recurring, non-operating (financing/capital/non-cash) and exceptional items from the
statutory measures. However, a number of these costs, despite being non-cash are ongoing expenses and will be related to the normal
operating basis of the business. The most significant of these is share incentivisation costs. The Directors have also reviewed other non-
cash expenses, including depreciation expense and IFRS16 related property expenses and concluded that these expenses and share
incentivisation costs should not be removed in the calculation of APMs with effect from the financial year ended 31 March 2022 and in
future financial years. The Adjusted profit for 2021 has been restated accordingly per the guidance from the FRC.
Profit before tax
Severance compensation and staff reorganisation costs1
Professional services2
Intangible asset amortisation and impairment
Adjustments
Adjusted profit before tax
Interest receivable
Adjusted operating profit
Year ended
31-Mar-22
£’000
Year ended
31-Mar-21
£’000
restated
79,291
704
6,920
9,641
17,265
96,556
(4)
34,929
1,793
15,025
7,240
24,058
58,987
(7)
96,552
58,980
1Staff redundancy, settlement and professional fees in relation to Architas and Neptune acquisitions and fund disposals.
2Includes professional services fees incurred in the acquisition and re-organisation of Majedie and Architas and re-organisation related
costs for Neptune. Other professional services fees incurred in the normal course of operations are not included in this adjustment.
Following the change in calculation methodology (as noted above) the Adjusted profit reconciliation for 2021 has been represented
under the new methodology which shows what the adjusted profit for 2021 would have been in the prior year.
157
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS Adjusted earnings per share is reconciled in the tables below:
Basic earnings per share
Adjustments:
Taxation
Severance compensation and staff reorganisation costs
Professional services1
Depreciation and Intangible asset amortisation
Adjustments:
Taxation at 19%
Adjusted basic earnings per share
Peformance fees
Adjusted basic earnings per share (excluding performance fees)
Year ended
31-Mar-22
£’000
Year ended
31-Mar-21
£’000
restated
97.65
47.02
33.13
1.16
11.41
15.91
61.61
(30.26)
129.00
(7.02)
121.98
12.33
3.05
25.53
12.66
53.57
(19.11)
81.48
(7.40)
74.08
1 Performance fee revenues contribution calculated in line with operating margin of 41% (2021: 39%) and a taxation rate of 19%
(2021: 19%).
Diluted earnings per share
Adjustments:
Taxation
Severance compensation and staff reorganisation costs
Professional services (1)
Depreciation and Intangible asset amortisation
Adjustments:
Taxation at 19%
Adjusted diluted earnings per share
Peformance fees
Adjusted diluted earnings per share (excluding performance fees)
Adjusted operating profit
Gross profit
Adjusted operating margin
Year ended
31-Mar-22
£’000
Year ended
31-Mar-21
£’000
restated
96.61
46.25
32.78
1.15
11.29
15.74
60.96
(29.94)
127.63
(6.95)
120.68
12.13
3.00
25.11
12.45
52.69
(18.80)
80.14
(6.68)
73.46
96,552
231,319
41.7%
58,980
164,431
35.9%
1 Performance fee revenues contribution calculated in line with operating margin of 42% (2021: 39%) and a taxation rate of 19%
(2021: 19%).
158 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS
8 INTEREST RECEIVABLE
Disclosures relating to the Group’s financial instruments risk management policies are detailed in note 2. Cash earns interest at floating
or fixed rates based on daily bank deposit rates. The weighted average effective interest rate on cash is 0.0% (2021: 0.0%).
9 DIVIDENDS
Ordinary Shares
Prior year second interim at 36 pence per share (2021: 24 pence)
Dividend equivalent paid on exercise of options
First interim at 22 pence per share (2021: 11 pence)
Total
Year ended
31-Mar-22
£’000
Year ended
31-Mar-21
£’000
21,839
736
13,372
35,947
14,442
–
6,632
21,074
In addition, the Directors are proposing a second interim dividend in respect of the financial year ending 31 March 2022 of 50p
per share which will absorb an estimated £33.0 million of shareholders’ funds. It will be paid on 5 August 2022 to shareholders
who are on the register of members at 1 July 2022, with the shares going ex-dividend on 30 June 2022.
10 TAXATION
(a) Analysis of charge in year
Current tax:
UK corporation tax at 19% (2021: 19%)*
Adjustment in respect of prior periods
Total current tax
Deferred tax:
Deferred tax originated from timing differences
Effect on deferred tax balances from change in corporate tax rates
Total charge in year
(b) Factors affecting current tax
Profit on ordinary activities before tax
Profit on ordinary activities at UK corporation tax at 19% (2021: 19%)*
Effects of:
Expenses not deductible for tax purposes
Depreciation in excess of capital allowances
Partnership tax adjustments
Tax relief on exercise of unapproved options
Overseas losses not deductible1
Effect on deferred tax balances from change in corporate tax rates
Adjustment in respect of prior periods
Total taxation
Year ended
31-Mar-22
£’000
Year ended
31-Mar-21
£’000
17,109
(186)
16,923
(1,460)
4,625
20,088
79,291
15,065
341
(37)
389
(321)
212
4,625
(186)
8,352
550
8,902
(1,645)
7,257
34,929
6,637
910
(28)
178
(1,185)
195
–
550
20,088
7,257
1 No deferred tax asset has been recognised in respect of overseas losses as it is not expected that such losses will be deductible
in future periods. Aggregate unused tax losses not recognised are £2.1 million and have no expiry date.
159
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS
11 DEFERRED TAX
Deferred tax assets
Balance as at 1 April
Deferred tax on option IFRS2 charge*
Balance as at 31 March
Deferred tax liability
Balance as at 1 April
Deferred tax prior year adjustment to reflect new rates
Deferred tax recognised on acquired intangible asset (See note 13)
Deferred tax on intangible asset amortisation
Balance as at 31 March
Net deferred tax liability
2022
£’000
1,984
(372)
1,612
2022
£’000
(15,420)
(4,625)
2021
£’000
1,479
505
1,984
2021
£’000
(6,440)
–
–
(10,283)
1,832
1,303
(18,213)
(16,601)
(15,420)
(13,436)
Under the UK Finance Act 2021 (substantively enacted on 24 May 2021), the UK corporation tax rate will increase for large
companies from the current rate of 19% to 25% with effect from 01 April 2023. This will increase the Company’s future tax charge
accordingly. The deferred tax position as at 31 March 2022 has been calculated based on these rates
12 EARNINGS PER SHARE
The calculation of basic earnings per share is based on profit after taxation for the year and the weighted average number of
Ordinary Shares in issue for each year. The weighted average number of Ordinary Shares was 60,628,715for the year (2021:
58,846,929). Shares held by the EBT are not eligible for dividends and are treated as cancelled for the purposes of calculating
earnings per share.
Diluted earnings per share are calculated on the same bases as set out above, after adjusting the weighted average number of
Ordinary Shares for the effect of options to subscribe for new Ordinary Shares or Ordinary Shares held in the EBT that were in
existence during the year ended 31 March 2021. The adjusted weighted average number of Ordinary Shares so calculated
for the year was 61,277,480 (2021 : 59,831,128). This is reconciled to the actual weighted number of Ordinary Shares as
follows:
Weighted average number of Ordinary Shares
Weighted average number of dilutive Ordinary shares under option:
- to the Liontrust Long Term Incentive Plan
- to the Liontrust Company Share Option Plan
Adjusted weighted average number of Ordinary Shares
As at
31-Mar-22
number
As at
31-Mar-21
number
60,628,715
58,846,929
625,902
22,863
959,895
24,304
61,277,480
59,831,128
Details of the options outstanding at 31 March 2022 to Executive Directors are set out in the Directors’ Remuneration Report on
page 130.
160 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS
13 ACQUISITION OF ARCHITAS AND MAJEDIE
On 30 October 2020 (“Completion Date”), the Company acquired the entire issued share capital and obtained control of Architas
Multi-Manager Limited and Architas Advisory Services Limited (together ‘Architas’) for a cost of £72.5 million (the “Acquisition”).
The consideration was funded by an issue of 5,090,000 shares raising £64.4 million net of fees. As a result of the Acquisition,
the Group is expected to increase its offerings to investors. It expects to reduce costs and benefit from economies of scale following
a process of restructuring and integration.
The goodwill of £7.952 million arising from the Acquisition is attributable to the Multi-Asset fund management team, and the
expected economies of scale efficiency increases from combining the operations of Architas and the Group.
The following table summarises the consideration paid for Architas, the fair value of the assets acquired and the liabilities assumed
at the Completion Date.
Consideration at 30 October 2020
Cash
Total consideration
Recognised amounts of identifiable assets acquire and liabilities assumed
Fixed assets
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Investment Management contracts
Deferred tax liabilities
Total identifiable net assets
Goodwill
Total
£’000
72,488
72,488
281
18,432
30,854
(28,876)
54,130
(10,285)
64,536
7,952
72,488
Acquisition related costs of £3.006 million and reorganisation costs of £4.062 million have been charged to administrative
expenses in the Consolidated Statement of Comprehensive Income for the year ended 31 March 2021.
The identifiable assets acquired were accounted for at fair value. The fair value of intangible assets acquired was calculated using
a Multiple Periods Excess Earnings Model (‘MPEEM’) which takes into account the future expected revenue and costs linked to the
assets acquired. The MPEEM model assisted the Group in arriving at the valuation of £54.1 million which management believe
is appropriate.
The material accounting judgements used by management in the MPEEM included the useful economic life of the assets (10 years),
the discount rate (13.9%), and net AuMA growth rate (1%). A 1% increase/decrease in the discount rate used would result in a
decrease/increase in the value of the intangible of £2.0 million and £2.1 million respectively; and a corresponding increase/
decrease in the value of goodwill of £1.6 million and £1.7 million. An increase/decrease in net AuMA growth of 1% would result
in an increase/decrease in the value of the intangible of £2.6 million respectively; and a corresponding decrease/increase in
the value of goodwill of £2.1 million. An increase of 1 year in the useful economic life of the asset would result in an increase in
the intangible of £2.9 million and decrease in goodwill of £2.3 million; a decrease in the useful economic life of 1 year would
decrease the value of the intangible by £2.6 million and increase the goodwill valuation by £2.1 million.
Goodwill on acquisition is allocated to the Multi Asset funds cash generating unit (“CGU”). See note 14 for details.
The discount rate used in the intangible model was a market participant weighted average cost of capital, determined using the
capital asset pricing model (post-tax) and calibrated using current assessments of market equity risk premia, company risk / beta,
small company premium, tax rates and gearing. The appropriate discount rate is appraised at the date of the relevant transaction
and then also at the reporting date to enable impairment reviews and testing.
161
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS On 1 October 2019 (“Completion Date”), the Company acquired the entire issued share capital and obtained control of Neptune
Investment Management Limited (“Neptune”) at a cost of £38 million (the “Acquisition”). As a result of the Acquisition, the Group
expected to increase its offerings to investors, both domestically and across Europe. It has reduced costs and benefits from
economies of scale following a process of restructuring and integration.
The goodwill of £7.8 million arising from the Acquisition is attributable to the Global Equity fund management team.
Majedie Asset Management
On 7 December 2021 LAM entered a conditional sale and purchase agreement (“SPA”) to acquire the entire share capital of
Majedie Asset Management Limited (“Majedie”). The SPA was conditional on FCA change of control approval and customary
closing conditions. FCA change in control approval was received on 8 March 2022 and the acquisition completed on 1 April
2022 (‘Completion’). As announced on 7 December 2021, the consideration for the acquisition was up to £120 million. The
consideration will be satisfied as follows:
• The issue of 3,683,241 new Ordinary Shares to Majedie Shareholders at Completion
• The issue of 244,014 new Ordinary Shares and up to £3.0 million in cash to be issued when the net asset value of Majedie
is agreed, to Majedie Shareholders;
• The issue of 538,674 new Ordinary Shares to Majedie Shareholders within 30 business days of 30 June 2025 dependent
on minimum AuMA for the period from Completion to 31 March 2023 and performance fees earned for the period from
Completion to 31 March 2025; and
• Up to £20 million satisfied in cash to be paid to Majedie Shareholders dependent on achieving certain institutional growth
targets from their existing new business pipeline over a period of up to three years.
As the acquisition completed after the balance sheet date the results of Majedie are not consolidated in these financial statements.
£1.915 million of acquisition related costs incurred by LAM in relation to legal advice, due diligence and other costs have been
recognised in the period ended 31 March 2022.
Majedie has been renamed Liontrust Portfolio Management Limited and the business is in the process of being integrated with
Liontrust’s standardised operating platform. The former Majedie investment management team are now the Liontrust Global
Fundamentals team.
At the date of signing these financial statements a full business combination and valuation exercise has not been completed. An
updated disclosure detailing the results of this exercise and the resultant goodwill and intangibles valuations will be included within
the interim financial statements at 30 September 2022.
14 ACQUISITIONS AND GOODWILL
Goodwill is allocated to the CGU to which it relates as the underlying funds acquired in each business acquisition are clearly
identifiable to the ongoing investment team that is managing them. The ATI Goodwill on acquisition is allocated to the Sustainable
Funds team CGU and at 31 March 2022 was £11,873,000 (2021: £11,873,000). At the balance sheet date an assessment
was made in relation to impairment of the goodwill where the recoverable amount, based on a value in use, was calculated
using an earnings model which used key assumptions such as the discount rate (13.0%, 2021: 12.8%), terminal growth rate (2%,
2021: 2%) and market growth (5%, 2021: 5%). Sensitivity analysis was carried out on this model which significantly reduced the
forecast net AuMA growth. These changes in estimates would not lead to any impairment in the carrying value of this goodwill.
The Neptune Goodwill on acquisition is allocated to the Global Equities team CGU and at 31 March 2022 was £7,753,000
(2021: £7,753,000). At the balance sheet date an assessment was made in relation to impairment of the goodwill where the
recoverable amount, based on a value in use, was calculated using an earnings model with reference to the projected cashflows
relating to the CGU over a period of 5 years, which used key assumptions such as net AuMA growth, comprising net sales of
£150 million and market growth rate (5%, 2021: 5% per annum), terminal growth rate (2%, 2021: 2%) and a discount rate
(13.0%, 2021: 12.8%). Based on these reasonable estimates there was no indication of impairment. Sensitivity analysis was
carried out on this model which significantly reduced the forecast net AuMA growth. These changes in estimates would not lead
to any impairment in the carrying value of this goodwill.
162 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS The Architas Goodwill on acquisition is allocated to the Multi Asset team CGU. At the balance sheet date an assessment was
made in relation to impairment of the goodwill where the recoverable amount, based on a value in use, was calculated using
an earnings model with reference to the projected cashflows relating to the CGU over a period of 5 years, which used key
assumptions such as net sales, net sales average growth of 1.4% (2021: N/A) with market growth of 4% (2021: N/A), terminal
growth rate (2%, 2021: 2%) and a discount rate of 13.5% (2021: 12.8%). Based on this assessment, the recoverable amount
was £61.7 million and the headroom above impairment was £3million, therefore no impairment is required was no indication
of impairment. Sensitivity analysis was carried out on this model which included changing the discount rate and reducing the net
AuMA growth. The discount rate could be increased to 14% without impacting goodwill and resulted in a £2.5 million reduction
in headroom. If the terminal growth rate reduced by 1.9% the headroom would be reduced by £0.4 million and would not lead
to an impairment. However, reducing the fund inflows to nil would result in the carrying value of goodwill being fully impaired.
Management considers this to be a reasonably possible scenario, however the five-year modelling timeframe would give ample
time for management action. The “breakeven” point for impairment is a market growth of 4.68% (with £nil net flows). Further,
given this is a relatively recent acquisition management have concluded that no impairment of the goodwill is required.
ATI - Sustainable Investment team
Neptune - Global Equity team
Architas - Multi-Asset team
Total
£’000
11,873
7,753
7,951
27,577
15 INTANGIBLE ASSETS
The Group currently holds three intangible assets. These comprise of investment management agreements acquired from ATI,
Neptune and Architas. An assessment is made at each reporting date, on a standalone basis for each intangible asset, as to
whether there is any indication that an asset in use may be impaired. If any such indication exists and the carrying value exceeds
the estimated recoverable amount at the time, the assets are written down to their recoverable amount. The recoverable amount is
measured as the greater of fair value less costs to sell and value in use. The assessment made at 31 March 2022 did not indicate
any impairment in the value of the ATI or Neptune intangible assets.
For Architas some indicators of impairment were present as net margins and net sales had not performed as strongly as originally
forecast in the intangible valuation process at acquisition. However, AUMA remain ahead of original forecast and significant
cost savings within the CGU have been achieved in the period since acquisition and therefore an updated estimation of the
recoverable amount of the Architas intangible assets resulted in the value in use being in excess of the current carrying value of
the CGU intangible assets. The recoverable amount was £48.2 million and the headroom above impairment was £1.8million,
therefore no impairment is required. This valuation model used the same assumptions as those in the goodwill impairment review
detailed in note 14, with the exception of the exclusion of new book AUM flows and the terminal growth rate (a remaining
useful economic life of 8 years has instead been modelled, reflecting the time elapsed since acquisition). Sensitivity analysis was
carried out on this model to assess the impact of reasonable downside scenarios, which included increasing the discount rate
and reducing market growth. A 1% increase in the discount rate did not result in an impairment of the intangible asset and the
“break-even” discount rate was 14.7%. Reducing market growth to NIL would result in an impairment of £6.0 million and the
“break-even” growth rate was 3.1%. Management conclude that no impairment is required.
As at 31 March 2022
Description
Investment management contracts acquired as part of ATI acquisition
Investment management contracts acquired as part of Neptune acquisition
Investment management contracts acquired as part of Architas acquisition
Carrying value
£’000
6,000
22,710
46,461
Remaining
amortisation
period
5 Years
7½ Years
8½ Years
163
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS Year to 31 March 2022
Cost
At 1 April 2021
Additions:
Investment management contracts acquired
At 31 March 2022
Accumulated amortisation and impairment
At 1 April 2021
Amortisation for the year
At 31 March 2022
Net Book Value
At 31 March 2022
At 31 March 2021
Year to 31 March 2021
Cost
At 1 April 2020
Additions:
Investment management contracts acquired
At 31 March 2021
Accumulated amortisation and impairment
At 1 April 2020
Amortisation for the year
At 31 March 2021
Net Book Value
At 31 March 2021
At 31 March 2020
Investment management contracts
£’000
115,113
–
115,113
30,301
9,641
39,942
75,171
84,812
Investment management contracts
£’000
60,983
54,130
115,113
23,061
7,240
30,301
84,812
37,922
164 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS 16 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is made up of leasehold improvements, office equipment, computer equipment and right-of-use
(ROU) assets.
Property, plant and equipment is stated at cost, less accumulated depreciation and any provision for impairment. Depreciation is
calculated on a straight-line basis to allocate the cost of each asset over its estimated useful life:
Leasehold improvements
Office equipment
Computer equipment
ROU assets
lower of the estimated useful and the remaining lease term on straight-line basis
3-10 years on a straight-line basis
3 years on a straight-line basis
lease term on a straight-line basis
The useful economic lives and residual values are reviewed at each financial period end and adjusted if appropriate. Specific
items are derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on
the disposal of an asset, calculated as the difference between the net disposal proceeds and the carrying amount of the item, is
included in the income statement in the year the item is sold or retired.
Year to 31 March 2022
Cost
As at 31 March 2021
Additions
Impairment loss
As at 31 March 2022
Accumulated depreciation
As at 31 March 2021
Charge for the year
As at 31 March 2022
Net Book Value
As at 31 March 2022
As at 31 March 2021
Year to 31 March 2021
Cost
As at 31 March 2020
Adjustment to remove previously capitalised VAT
As at 1 April 2020
Additions
As at 31 March 2021
Accumulated depreciation
As at 1 April 2020
Charge for the year
As at 31 March 2021
Net Book Value
At 31 March 2021
At 31 March 2020
ROU
Assets
£’000
Leasehold
Improvements
£’000
Office
Equipment
£’000
Computer
Equipment
£’000
7,597
1,656
(1,291)
7,962
2,880
2,117
4,997
2,965
4,717
1,013
94
–-
1,107
752
172
924
183
261
485
72
–
557
413
36
449
108
72
784
344
–-
1,128
577
149
726
402
207
ROU
Assets
£’000
Leasehold
Improvements
£’000
Office
Equipment
£’000
Computer
Equipment
£’000
8,551
(1,170)
7,381
216
7,597
1,282
1,598
2,880
4,717
7,269
953
–
953
60
1,013
586
166
752
261
367
471
–
471
14
485
378
35
413
72
93
603
–
603
181
784
482
95
577
207
121
Total
£’000
9,879
2,166
(1,291)
10,754
4,622
2,474
7,096
3,658
5,257
Total
£’000
10,578
(1,170)
9,408
471
9,879
2,728
1,894
4,622
5,257
7,850
165
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS Depreciation has been included in the Consolidated Statement of Comprehensive Income within administration expenses.
During the year management carried out a review of their office properties and took the decision to accelerate the depreciation
of one property to a ROU asset value of nil.
Lease liability
Opening balance
Additions
Transfer to trade and other payables
Rent & interest charge for the year
Closing balance
As at
31-Mar-22
£’000
As at
31-Mar-21
£’000
5,016
1,506
(1,203)
5,319
(1,652)
3,667
7,570
220
–
7,790
(2,774)
5,016
Measurement of ROU asset
At the initial application date, 1 April 2019, the ROU asset was measured at the amount equal the lease liability with an IFRS16 reserve
adjustment made to retained earnings for the lease prepayments accounted for in the prior financial year ending 31 March 2019.
ROU asset
Office space
Depreciation on ROU asset
Finance costs
Cash outflow for leases for the year
Additional profit or loss and cash flow information
The Group did not sublease any office premises during the current financial year.
Sale and leaseback transactions
There have been no sale and leaseback transactions in the current financial year.
17 TRADE AND OTHER RECEIVABLES
Trade receivables
- Fees receivable
- Unit trust sales and cancellations
Prepayments and accrued income
As at
31-Mar-22
£’000
As at
31-Mar-21
£’000
2,965
2,965
2,112
142
1,889
4,717
4,717
1,597
113
1,169
As at
31-Mar-22
£’000
As at
31-Mar-21
£’000
29,989
33,118
200,754
254,006
4,753
2,681
235,496
289,805
All financial assets listed above are non-interest bearing. The carrying amount of these non-interest bearing trade and other
receivables approximates their fair value.
As at 31 March 2022, trade receivables of £nil (2021: £nil) were past due but not impaired. Expected credit losses are immaterial.
166 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS 18 FINANCIAL ASSETS
The Group holds financial assets that have been categorised within one of three levels using a fair value hierarchy that reflects the
significance of the inputs into measuring the fair value. These levels are based on the degree to which the fair value is observable
and are defined as follows:
• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets and
liabilities.
• Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are
not based on observable market data.
As at the balance sheet date all financial assets are categorised as Level 1.
Under IFRS9 all financial assets are categorised as Assets held at fair value through profit and loss
The Group’s financial assets represent shares in the GF Global Strategic Equity Fund, the GF European Smaller Companies Fund,
the GF European Strategic Equity Fund, The GF Asia Income Fund, and the GF UK Growth Fund (all sub-funds of Liontrust Global
Funds PLC) and are valued at bid price); and units in the Liontrust Global Income Fund, The Liontrust Macro Equity Income Fund, The
Liontrust Asia Income Fund and the Liontrust UK Growth Fund. The gain on the fair value adjustments during the year net of tax was
£26,000 (2021 gain: £672,000). Foreign currency assets are translated at rates of exchange ruling at the balance sheet date.
Financial assets in Level 1
UK Authorised unit trusts & UK authorised ICVCs
Ireland Open Ended Investment company
Total Financial Assets
As at 31-Mar-22
Assets held at
fair value
through profit
and loss
£’000
As at 31-Mar-21
Assets held at
fair value
through profit
and loss
£’000
3,498
670
4,168
1,520
668
2,188
167
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS
19 TRADE AND OTHER PAYABLES
Current Liabilities
Trade payables – unit trust repurchases and creations
Other payables including taxation and social security
Lease liability
DBVAP liability
Other payables
Non current Liabilities
Lease liability
20 ORDINARY SHARES
As at
31-Mar-22
£’000
As at
31-Mar-21
£’000
201,931
255,690
549
893
2,404
49,892
255,669
3,087
1,598
1,491
36,141
298,007
As at
31-Mar-22
£’000
As at
31-Mar-21
£’000
2,775
3,418
Allotted, called up and fully paid ordinary shares of 1 pence
As at 1 April
Issued during the year
As at 31 March
2022
Shares
2022
£’000
2021
Shares
2021
£’000
61,058,960
610
55,512,061
193,204
2
5,546,899
61,252,164
612
61,058,960
555
55
610
21 RESERVES
There were no changes to reserves in the year. In October 2020 the Group undertook a capital reduction process to transfer
£57,439,000 from the Share Premium Reserve to the Profit and Loss Reserve.
168 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS 22 RELATED UNDERTAKINGS
The Companies Act 2006 requires disclosure of certain information about the Group’s related undertakings which is set out in this
note. Related undertakings comprise subsidiaries, joint ventures, associates and other significant holdings. Significant holdings are
where the Group either has a shareholding greater than or equal to 20% of the nominal value of any share class, or a book value
greater than 20% of the Group’s assets.
a) The direct related undertakings of the Company as at 31 March 2022 are listed below
Name of undertaking
Liontrust Investment Funds Limited
Liontrust Investment Services Limited
Liontrust Investment Management Limited
Liontrust Multi-Asset Limited
Liontrust Advisory Services Limited
Liontrust International Luxembourg SA
Liontrust GF European Strategic Equity Fund CF
Liontrust GF European Smaller Companies CF
Liontrust GF Strategic Bond Fund B1 Acc
Liontrust GF SF European Corporate Bond Fund A1
Liontrust GF SF European Corporate Bond Fund A5
Liontrust GF Absolute Return Bond Fund A1 AC
Liontrust GF SF Global Growth Fund A1 AC EUR Acc
Liontrust GF SF Global Growth Fund A8 AC EUR Acc
Liontrust GF SF Global Growth Fund C8 D GBP Acc
Liontrust GF SF Global Growth Fund D1 A CHF Acc
Liontrust GF SF Global Growth Fund C1 D GBP Acc
Liontrust GF UK Growth C1 Acc
Liontrust GF Sustainable Future Multi Asset Global Fund D5 CHF ACC
Liontrust Monthly Income Bond Fund Z Gross Inc
Liontrust UK Growth Fund S Inc
b) The indirect related undertakings of the Company as at 31 March 2022 are listed below
Name of undertaking
Liontrust Fund Partners LLP*
Liontrust Investment Partners LLP*
Liontrust Members Reward Partnership LP*
1Registered office: 2 Savoy Court, London, WC2R 0EZ
2Registered office: 18 Val Sainte Croix, L-1370, Luxembourg
3Registered office: 5th floor, The Exchange, George’s Dock, IFSC, Dublin 1, Ireland
4Registered office: 44 Esplanade, St Helier, Jersey, JE4 9WG
*Consolidated entities
Country of
incorporation
% held
UK1
UK1
UK1
UK2
UK2
Luxembourg
Ireland3
Ireland3
Ireland3
Ireland3
Ireland3
Ireland3
Ireland3
Ireland3
Ireland3
Ireland3
Ireland3
Ireland3
UK
UK
UK
Country of
incorporation
UK1
UK1
Jersey4
100
100
100
100
100
100
100
100
94
37
68
58
100
100
100
100
100
100
60
100
100
% held
100%
100%
100%
169
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS 23 OWN SHARES AND OPTIONS
Approval was given at a General Meeting in February 2016 for the grant of options under the Liontrust Long Tern Incentive Plan
(the “LTIP”). The Board adopted the Liontrust Company Share Option Plan (the “CSOP”) in June 2018. The options granted under
the LTIP and CSOP, including to the Executive Directors, were as follows:
The CSOP scheme is an HMRC approved company share option plan that is aimed at those employees not covered by the LTIP
scheme. The options become exercisable between the 3rd and 10th anniversary of the issue date.
The Phantom Option Scheme is an unapproved scheme to cover international employees. It is a cash settled scheme arranged to
mirror the LTIP arrangements.
Issue Date
1 April 2021
Options
Granted
5 September 2017
22 June 2017
27 June 2018
27 June 2018
8 April 2019
12 August 2019
12 August 2019
8 July 2020
14 July 2020
23 June 2021
8 July 2021
117,281
151,846
272,013
29,304
33,173
283,621
27,552
190,503
21,056
–
–
Issue Date
1 April 2020
20 June 2016
5 September 2017
22 June 2017
27 June 2018
27 June 2018
8 April 2019
12 August 2019
12 August 2019
8 July 2020
14 July 2020
111,845
234,562
379,619
272,013
32,560
33,173
283,621
28,864
–
–
–
–
–
–
–
–
–
155,130
17,714
Options
Granted
–
–
–
–
–
–
–
–
–
–
190,503
21,808
Options
Exercised
(117,281)
(75,923)
(162,005)
(29,304)
–
–
–
–
–
–
–
Options
Exercised
(111,845)
(117,281)
(227,773)
–
–
–
–
–
–
–
Lapsed
–
–
–
–
–
–
31 March
2022
–
75,923
110,008
Exercise
price
Nil
Nil
Nil
–
£6.14
33,173
283,621
(2,624)
24,928
–
190,503
Nil
Nil
£7.62
Nil
(1,504)
19,552
£13.30
–
155,130
Nil
(521)
17,193
£19.18
Lapsed
–
–
–
–
(3,256)
–
–
31 March
2021
–
117,281
151,846
272,013
29,304
33,173
283,621
(1,312)
27,552
–
190,503
Exercise
price
Nil
Nil
Nil
Nil
£6.14
Nil
Nil
£7.62
Nil
(752)
21,056
£13.30
Scheme
LTIP
LTIP
LTIP
CSOP
Phantom
LTIP
CSOP
LTIP
CSOP
LTIP
CSOP
Scheme
LTIP
LTIP
LTIP
LTIP
CSOP
Phantom
LTIP
CSOP
LTIP
CSOP
170 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS Under the Liontrust Members Reward Plan (‘LMRP’) certain individual members have been allocated profits with which they have
made a capital contribution to the Liontrust LLP Members Reward Limited Partnership (‘LLMRLP’) , which entitle such individual
member to a future amount dependant on performance conditions being met. The entitlement which the member of LLMRLP would
have is calculated on the basis of the application of a percentage to the initial Capital contribution. The amounts allocated, in
terms of number of Ordinary shares, to individual members were as follows:
Issue Date
1 April 2021
Granted
Exercised
Lapsed
31 March
2022
Exercise
price
6 September 2017
22 June 2017
22 June 2018
12 August 2019
7 July 2020
19 July 2021
45,688
75,878
18,896
94,411
57,605
–
–
–
–
–
–
33,700
(22,844)
(40,226)
(11,338)
–
–
–
–
–
–
–
–
–
22,844
35,652
7,558
94,411
57,605
33,700
Nil
Nil
Nil
Nil
Nil
Nil
Issue Date
1 April 2020
Granted
Exercised
Lapsed
31 March
2021
Exercise
price
6 September 2017
22 June 2017
22 June 2018
12 August 2019
7 July 2020
148,948
189,692
18,896
94,411
–
–
–
–
–
57,605
(103,260)
(113,814)
–
–
–
–
–
–
–
–
45,688
75,878
18,896
94,411
57,605
Nil
Nil
Nil
Nil
Nil
Details of the LTIP options can be found in the Directors’ Remuneration report.
Scheme
LMRP
LMRP
LMRP
LMRP
LMRP
LMRP
Scheme
LMRP
LMRP
LMRP
LMRP
LMRP
At 31 March 2022, the Liontrust Asset Management Employee Trust owned 767,971 shares (2021: 656,257) at a cost
of £7,674,252 (2021: £3,694,167). Dividends on these shares have been waived and they are treated as cancelled for
the purposes of calculating the earnings per share of the Group. As at 31 March 2022 the market value of the shares was
£9,784,000 (2021: £9,319,000).
At 31 March 2022, the Liontrust LLP members Reward Partnership owned 197,512 shares (2021: 292,478) at a cost of
£1,795,470 (2021: £2,168,361). As at 31 March 2022 the market value of the shares was £2,583,000 (2021: £4,153,000).
171
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS 24 SHARE BASED PAYMENTS
Liontrust Asset Management PLC (“Company”, “LAM”) currently operates a number of equity-settled, and cash-settled, share-based
compensation plans under which the entity receives services from employees and members as consideration for equity-linked
instruments (share options, phantom share awards and share awards with vesting conditions).
(a) The Company Share Option Plan (“CSOP”) permits the Company to grant share options with a strike price set at the market
price at the date of issue over ordinary shares in the capital of LAM to qualifying employees. The equity settled options vest after
3 years and do not have any performance conditions attached.
(b) The Employees Long Term Incentive Plan (“eLTIP”) is intended to provide long term reward, incentivise strong performance and
retain Executive Directors and senior employees employed by LAM. The eLTIP issues nil-priced options with vesting, exercise and
holding conditions. The equity settled options vest after 3 years subject to various performance targets detailed below:
• Absolute TSP performance condition - 20% of the award vest subject to the Company’s absolute Total Shareholder Return (“TSR”)
performance from the grant date to the vesting date.
• Relative TSR performance condition - 20% of the award vest subject to the Company’s relative TSR performance compared to
the FTSE All Share Index (“Index”) with the Index price calculated based on the 30 day average preceding, and at the end of,
the performance period.
• EPS performance condition - 30% of the award will vest subject to the Company’s diluted earnings per share (“EPS”) performance
with EPS growth and vesting at the same thresholds as the TSR vesting percentages.
• Strategic performance condition - 30% of the award will vest subject to the Company’s performance against certain strategic
targets which include growth in assets under management, investment performance, and personal appraisal/HR performance.
(c) The Members Long Term Incentive Plan (“mLTIP”) is intended to provide long term reward, incentivise strong performance and retain
senior management executives who are members of Liontrust Investment Partners LIP (“LIP”) and Liontrust Fund Partners LLP (“LFP”). The
mLTIP awards equity settled options to members with vesting, exercise and holding conditions aligned to those of the eLTIP.
(d) The Phantom Awards are intended to provide long term reward, incentivise strong performance and retain senior management
employed by Liontrust International (Luxembourg) S.A. (“LILSA”). Phantom awards are contractual arrangements to provide
equivalent reward and incentivisation as the eLTIP to employees of the Luxembourg subsidiary LILSA. These options are cash settled.
Unvested options for the year:
Outstanding at 1 April 2021
Granted during year
Forfeited during year
Exercised during year
Vested but not exercised during year
Outstanding at 31 March 2021
Exercisable at 31 March 2021
Number of
shares
1,418,827
206,544
(6,657)
(458,921)
(33,173)
1,126,620
–
Weighted
average
exercise price
0.37
0.69
–
172 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS Valuation approach
The fair value of the options granted during the year were calculated at the measurement date using the valuation models
• Monte Carlo – for options subject to the absolute and relative TSR performance conditions in the eLTIP, mLTIP and Phantom
Awards; and
• Black Scholes – for options under the eLTIP, mLTIP and Phantom Awards with non-market based performance conditions, and for
all CSOP options.
The specific adjustments made to value the share options subject to the absolute TSR performance condition are as follows:
1. simulated one possible path of the daily share price (assuming nil dividends) from the grant/measurement dates to the end of
the performance period;
2. calculated the 30 day average Company share at the end of the performance period;
3. used the total Company share price calculated in step 2 to calculate the share price return over the performance period;
4. calculated the percentage of options vesting on the vesting date using the vesting criteria;
5. assessed the Company share price on vesting at the vesting date and the present value of a nil-cost option over a single share
at that date, discounted at the grant/measurement date using a risk-free rate;
6. applied the percentage of options calculated in step 4 to the present value of the nil-cost call option in step5; and
7. run steps 1 to 5 for 100,000 iterations and taken the mean-average outcome to arrive at the assessed fair value per option.
The specific adjustments made to value the share options subject to the relative TSR performance condition are as follows:
1. simulated one possible path of the daily Company share price and one possible path of daily index price from the grant/
measurement dates to the end of the performance period. Company and index prices are not correlated;
2. calculated the 30 day average Company share price and 30 day average index price at the end of the performance period;
3. used the total Company share price and Index price calculated in Step 2 to calculate the share price return and Index return
over the Performance Period;
4. measured the difference between the Company share price return and Index return to calculate the percentage of options
vesting on the vesting date using the vesting criteria;
5. assessed the Company share price on vesting at the vesting date and the present value of a nil-cost option over a single share
at that date, discounted to the grant date/measurement date using a risk-free rate;
6. applied the percentage of options calculated in Step 4 to the present value of the nil-cost call option in Step 5; and
7. run steps 1 to 5 for 100,000 iterations and taken the mean-average outcome to arrive at the assessed fair value per option.
Measurement date
• Equity settled transactions - date the awards were granted
• Cash settled transactions - financial reporting date
Inputs common to both valuation models
Plan
CSOP
eLTIP
mLTIP
Valuation date
8 July 2021
23 July 2021
29 July 2021
Phantom awards
30 September 2021
Share price at
valuation
date
Exercise price
at valuation
date
Option life
£19.18
£16.30
£20.50
£21.25
£19.18
3.0 years
£nil
£nil
£nil
3.0 years
3.0 years
0.2 years
Expected
volatility
41.60%
41.50%
41.50%
31.60%
Dividend
yield
Risk free
interest rate
2.50%
0.00%
0.00%
0.00%
0.12%
0.12%
0.12%
0.12%
173
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS Fair value conclusion
Plan
Options granted during year to 31 March 2022:
CSOP
eLTIP
mLTIP
Number of
shares
Weighted
average fair
value £
17,193
78,572
155,130
1,916,786
33,700
536,032
206,023
2,531,390
The share incentivisation expense in relation to the Directors for the year ended 31 March 2022 was £1,125,000 (2021:
£868,000).
Share based payment plan – equity settled
IFRS2 charge – employees
IFRS2 charge -–members
Share based payment plan – cash settled
Employees
Option settlement expense
Share option NIC expense
Cost of matching SIP shares
Plan administration costs
As at
31-Mar-22
£’000
As at
31-Mar-21
£’000
1,886
2,109
554
527
480
2,920
704
–
2,636
2,057
354
685
410
388
315
398
4,703
6,164
174 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS
25 RELATED PARTY TRANSACTIONS
During the year the Group received fees from unit trusts and ICVCs under management of £228,832,000 (2021:
£148,800,000). Transactions with these funds comprised creations of £7,276,647,000 (2021: £5,552,260,000) and
liquidations of £4,699,727,000 (2021: £4,179,127,000). Directors can invest in funds managed by the Group on commercial
terms that are no more favourable than those available to staff in general. As at 31 March 2022 the Group owed the funds
£201,931,000 (2021: £255,680,000) in respect of creations and was owed £230,743,000 (2021: £271,642,000) in
respect of cancellations and fees.
During the year the Group received fees from offshore funds under management of £8,776,000 (2021: £5,567,000).
Transactions with these funds comprised purchases of £170,000 (2021: £116,000) and sales of £84,000 (2021: £nil). As
at 31 March 2021 the Group was owed £873,000 (2021: £711,000) in respect of offshore fund fees. Compensation to key
management personnel (Directors) is disclosed in table 1.1 of the Directors’ Remuneration Report on page 113. The aggregate
gains made by Directors on the exercise of share options is disclosed in the table in section 3.1 of the Directors Remuneration
Report on page 122. The charge recognised in the statement of comprehensive income in relation to Directors share options was
£1,125,000 (2021: £868,000).
Interests in structured entities
IFRS 12 requires certain disclosures in respect of interests in subsidiaries, joint arrangements, associates and unconsolidated
structured entities.
A structured entity is defined as an entity that has been designed so that voting or similar rights are not the dominant factor in
deciding who controls the entity, such as when any voting rights relate to administrative tasks only, or when the relevant activities
are directed by means of contractual arrangements.
The Group has assessed whether the funds it manages are structured entities and concluded that funds managed by the Group are
structured entities unless substantive removal or liquidation rights exist.
The Group has interests in these funds through the receipt of management and other fees and, in certain funds, through ownership
of fund units. The Group’s investments in these funds are subject to the terms and conditions of the respective fund’s offering
documentation and are susceptible to market price risk. The investments are included in financial assets at fair value through profit
or loss in the balance sheet. Where the Group has no equity holding in a fund it manages, the investment risk is borne by the
external investors and therefore the Group’s maximum exposure to loss relates to future fees and any uncollected fees at the balance
sheet date. Where the Group does have an equity holding, the maximum exposure to loss constitutes the future and uncollected
management fees plus the fair value of the Group’s investment in that fund.
Number of funds
Net AuMA of funds
£bn
Financial assets at
FVTPL
£m
As at 31 March 2022
As at 31 March 2021
63
87
30.4
27.6
4.2
2.1
Fees received
in the year
£m
228.8
148.8
Fees receivable
£m
30.0
17.6
26 CONTINGENT ASSETS AND LIABILITIES
The Group can earn performance fees on some of the segregated and fund accounts that it manages. In some cases a proportion
of the fee earned is deferred until the next performance fee is payable or offset against future underperformance on that account.
As there is no certainty that such deferred fees will be collectable in future years, the Group’s accounting policy is to include
performance fees in income only when they become due and collectable and therefore the element (if any) deferred beyond 31
March 2022 has not been recognised in the results for the year.
175
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS COMPANY BALANCE SHEET
as at 31 March 2022
Assets
Non current assets
Property, plant and equipment
Investment in subsidiary undertakings
Loan to Employee Benefit Trust
Total non current assets
Current assets
Trade and other receivables
Financial assets
Deferred tax assets
Cash and cash equivalents
Total current assets
Liabilities
Non current liabilities
Lease liabilities
Total non current liabilities
Current liabilities
Trade and other payables
Corporation tax payable
Total current liabilities
Net current liabilities
Net assets
Shareholders’ equity
Ordinary shares
Share premium
Capital redemption reserve
Retained earnings
Total equity
Note
31-Mar-22
£’000
31-Mar-21
£’000
30
31
29
32
33
34
35
3,638
142,902
11,172
157,712
19,622
670
1,613
21,286
43,191
5,244
153,210
4,992
163,446
21,116
560
1,985
6,705
30,366
(2,774)
(2,774)
(3,215)
(3,215)
(46,877)
(2,479)
(50,536)
(7,165)
147,773
612
64,370
19
82,772
147,773
(42,106)
–
(42,106)
(11,740)
148,491
610
64,370
19
83,492
148,491
The notes on pages 179 to 183 form an integral part of these Company financial statements.
The financial statements on pages 176 to 183 were approved and authorised for issue by the Board of Directors on 21 June 2022
and signed on its behalf by V.K. Abrol, Chief Operating Officer and Chief Financial Officer.
Company Number 2954692
176 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS
COMPANY CASH FLOW STATEMENT
for the year ended 31 March 2022
Year ended
31-Mar-22
£’000
Year ended
31-Mar-21
£’000
Cash flows from operating activities
Cash inflow from operations
Cash outflow from operations
Net cash generated from/(used in) operations
Interest received
Tax paid
Net cash (used in)/generated from operating activities
Cash flows from investing activities
Purchase of property and equipment
Acquisition of Architas
Loan to the EBT
Loan repaid by the EBT
Purchase of seeding investments
Sale of seeding investments
Increase in Investment in subsidiary
Cash received on liquidation of subsidiary
Dividends received from subsidiaries
Net cash generated from/(used in) investing activities
Cash flows from financing activities
Payment of lease liabilities
Issue of shares
Dividend paid
Net cash used in financing activities
Net increase in cash and cash equivalents
Opening cash and cash equivalents
Closing cash and cash equivalents
Cash and cash equivalents consist only of cash balances.
The notes on pages 179 to 183 form an integral part of these Company financial statements.
496
1,132
1,628
1
(12,500)
(10,871)
(507)
–
(8,125)
1,183
(170)
84
-
17
70,000
62,482
(1,817)
–
(35,213)
(37,030)
14,581
6,705
21,286
21,734
(10,786)
10,948
5
(6,416)
4,537
(254)
(72,556)
–
1,334
(116)
–
(1,175)
–
30,000
(42,767)
(1,046)
64,421
(21,074)
42,301
4,071
2,634
6,705
177
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2022
Balance at 1 April 2021 brought forward
Profit for the year
Dividends paid
Shares issued
Equity share options issued
Deferred tax on option charge taken to equity
Ordinary
shares
£ ‘000
610
Share
premium
£ ‘000
64,370
–
–
2
–
–
–
–
–
–
–
Capital
redemption
£ ‘000
19
–
–
–
–
–
Retained
earnings
£ ‘000
83,492
33,342
Total
Equity
£ ‘000
148,491
33,342
(35,947)
(35,947)
(2)
1,887
–
–
1,887
–
Balance at 31 March 2022
612
64,370
19
82,772
147,773
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2021
Balance at 1 April 2021 brought forward
Profit for the year
Dividends paid
Capital reorganisation
Shares issued
Equity share options issued
Deferred tax on option charge taken to equity
Ordinary
shares
£ ‘000
555
–
–
–-
55
–
–
Share
premium
£ ‘000
57,439
–
–
(57,439)
64,370
–
–
Capital
redemption
£ ‘000
19
–
–
–
–
–
–
Retained
earnings
£ ‘000
34,849
9,889
Total
Equity
£ ‘000
92,862
9,889
(21,074)
(21,074)
57,439
–
-
64,425
2,225
164
2,225
164
Balance at 31 March 2021
610
64,370
19
83,492
148,491
The notes on pages 179 to 183 form an integral part of these Company financial statements
.
178 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS 27 SIGNIFICANT ACCOUNTING POLICIES
The separate financial statements of the Company have been prepared in accordance with UK-adopted International Financial
Reporting Standards (IFRS) as applied in accordance with the provisions of the Companies Act 2006 and those parts of the
Companies Act 2006 applicable to companies reporting under IFRS. The financial information has been prepared based on the
IFRS standards effective as at 31 March 2022. Under section s408 of the Companies Act 2006 the Company is exempt from
the requirement to present its own statement of comprehensive income.
The financial statements have been prepared on the going concern basis under the historical cost convention (except for the
measurement of financial assets at fair value through profit and loss and DBVAP liability which are held at their fair value) and have
assessed the appropriateness of the going concern basis as set out in note 1(b). The principal accounting policies are the same
as those set out in note 1.
Investment in subsidiaries are stated at cost less, where appropriate, provisions for impairment.
Notes 27 to 36 reflect the information for the Company.
28 FINANCIAL RISK MANAGEMENT
The Company’s activities expose it to a variety of financial risks: market risk (including price risk, cash flow interest rate risk and
foreign exchange risk), credit risk, capital risk and liquidity risk. The Company is covered by the Group’s overall risk management
programme. The risk management policies are the same as those set out in note 2 and elsewhere in the report and financial
statements.
The specific risks affecting the Company are as follows:
Market risk
The investments in the sub-funds of Liontrust Global Funds PLC are valued on a daily basis at mid price. The investments are held
as fair value through profit and loss financial assets.
Management consider, based on historic information, that a sensitivity rate of 20% is appropriate. Based on the holdings in
the Liontrust Global Funds at the balance sheet date a price movement of 20% would result in a movement in the value of the
investment of £83,000 (2021: £83,000).
Cash flow interest rate risk
The Company holds cash on deposit. The interest on these balances is based on floating rates and fixed rates. The Company
monitors its exposure to interest rate movements and may decide to adjust the balance between deposits on fixed or floating
interest rates, or adjust the level of deposits. Following a review of sensitivity based on average cash holdings during the year a
1% increase or decrease in the interest rate will cause a £67,000 increase or decrease in interest receivable (2021 : £40,000).
In addition to the risks covered by the Group risk management policies. The Company is subject to some specific risks relating
to its interaction with other Group companies. The company reviews its balances due to and from other Group companies on a
regular basis.
Prudent liquidity risk management required the maintenance of sufficient cash and marketable securities. The Company monitors
rolling forecasts of its liquidity reserves (comprising readily realisable investments and cash and cash equivalents) on the basis of
expected cash flow.
The Company has analysed its financial liabilities into maturity groupings based on the remaining period at the balance sheet date
to the contractual maturity date. The amounts disclosed in the table below are the contractual undiscounted cash flows.
As at 31 March 2022
Payables
As at 31 March 2021
Payables
Within 3 months
Between
3 months
Over one year
45,946
–
2,774
Within 3 months
Between
3 months
Over one year
41,542
–
3,215
179
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS 29 LOAN TO THE EMPLOYEE BENEFIT TRUST
The Company is the sponsor of Liontrust Asset Management Employee Trust (the ‘Trust’). An annual impairment review was carried
out under the appropriate accounting standards and the value of the loan to the EBT was calculated at £11,172,000 (2021:
£4,992,000) . The current value of the shares in the trust are disclosed in Note 23.
30 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is made up of leasehold improvements, office equipment, computer equipment and right-of-use
(ROU) assets.
Property, plant and equipment is stated at cost, less accumulated depreciation and any provision for impairment. Depreciation is
calculated on a straight-line basis to allocate the cost of each asset over its estimated useful life:
Leasehold improvements
Office equipment
Computer equipment
ROU assets
lower of the estimated useful and the remaining lease term on straight-line basis
3-10 years on a straight-line basis
3 years on a straight-line basis
lease term on a straight-line basis
The useful economic lives and residual values are reviewed at each financial period end and adjusted if appropriate. Specific
items are derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on
the disposal of an asset, calculated as the difference between the net disposal proceeds and the carrying amount of the item, is
included in the income statement in the year the item is sold or retired.
Year to 31 March 2022
Cost
As at 1 April 2021
Additions
Impairment loss
As at 31 March 2022
Accumulated depreciation
As at 1 April 2021
Charge for the year
As at 31 March 2022
Net Book Value
As at 31 March 2022
As at 31 March 2021
ROU
Assets
£’000
Leasehold
Improvements
£’000
Office
Equipment
£’000
Computer
Equipment
£’000
7,597
1,656
(1,296)
7,957
2,880
2,112
4,992
2,965
4,717
1,013
94
–-
1,107
752
172
924
183
261
472
70
–
542
413
34
447
95
59
Total
£’000
9,866
2,156
(1,296)
10,726
4,622
2,446
7,088
784
336
–
1,120
577
148
725
395
207
3,638
5,244
180 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS
Year to 31 March 2021
Cost
As at 1 April 2020
Adjustment to remove previously capitalised VAT
Additions
As at 31 March 2021
Accumulated depreciation
As at 1 April 2020
Charge for the year
As at 31 March 2021
Net Book Value
As at 31 March 2021
As at 31 March 2020
30 PROPERTY, PLANT AND EQUIPMENT
Lease liability
Current
Non-current
ROU
Assets
£’000
Leasehold
Improvements
£’000
Office
Equipment
£’000
Computer
Equipment
£’000
8,551
(1,170)
7,381
216
7,597
1,282
1,598
2,880
4,717
7,269
953
–
953
60
1,013
586
166
752
261
367
458
–
458
14
472
378
35
413
59
80
603
–
603
181
784
482
95
577
207
121
Total
£’000
10,565
(1,170)
9,395
471
9,866
2,728
1,894
4,622
5,244
7,837
As at
31 March 2022
£’000
As at
1 April 2021
£’000
1,801
3,215
5,016
1,801
3,215
5,016
Measurement of ROU asset
At the initial application date, 1 April 2019, the ROU asset was measured at the amount equal the lease liability with an IFRS
16 reserve adjustment made to retained earnings for the lease prepayments accounted for in the prior financial year ending 31
March 2019.
ROU asset
Office space
Depreciation on ROU asset
Finance costs
Cash outflow for leases for the year
Additional profit or loss and cash flow information
The Company did not sublease any office premises during the current financial year.
Sale and leaseback transactions
There have been no sale and leaseback transactions in the current financial year.
Year ended
31 March 2021
£’000
As at
1 April 2022
£’000
2,965
2,965
2,112
142
1,889
4,717
4,717
1,598
113
1,169
181
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS
31 INVESTMENT IN SUBSIDIARY UNDERTAKINGS
The Company’s investment in subsidiary undertakings represents 100% interests in the ordinary shares, capital, voting rights of
Liontrust Investment Funds Limited and Liontrust Investment Services Limited, both registered in England whose principal activity is
as operating companies for the Group’s investment management LLP’s; and Liontrust International Luxembourg SA, whose principal
activity is European sales; Liontrust Multi-Asset Limited Liontrust Advisory Services Limited and Liontrust Investment Management
Limited were acquired through acquisitions and are now non-trading. All subsidiary undertakings have the same accounting date
as the parent company. Full details of the Company’s subsidiary undertakings can be found on page 84.
Balance at 1 April
Additions during the year
Impairment during the year
Balance at 31 March
2022
£’000
153,210
–
(10,308)
142,902
2021
£’000
80,633
73,663
(1,086)
153,210
During the year ended 31 March 2022 the Company liquidated two wholly-owned subsidiaries and accordingly has fully
impaired the carrying value of these subsidiaries.
32 TRADE AND OTHER RECEIVABLES
Receivables due from subsidiary undertakings1
Prepayments and accrued income
31-Mar-22
£’000
18,700
922
19,622
31-Mar-21
£’000
21,020
96
21,116
All financial assets listed above are non-interest bearing. The carrying amount of these non-interest bearing trade and other
receivables approximates their fair value.
33 FINANCIAL ASSETS
Assets held as available-for-sale:
The Company’s financial assets held as fair value through profit or loss represent shares in the sub funds of the Liontrust Global Fund
PLC and are valued at mid price. The assets are all categorized as Level 1 in line with the categorization detailed in note 16.
Financial assets
Ireland Open Ended Investment Company
31-Mar-22
31-Mar-21
Assets held at
fair value
through profit
andloss
£’000
Assets held at
fair value
through profit
andloss
£’000
670
670
560
560
182 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS
34 TRADE AND OTHER PAYABLES
Current payables
Other payables including taxation and social security
Payables due to subsidiary undertakings1
Lease liability
Other payables
Non current payables
Lease liability
2022
£’000
596
29,908
893
15,480
46,877
2022
£’000
2,774
2021
£’000
3,613
29,163
1,801
7,529
42,106
2021
£’000
3,215
All financial liabilities listed above are non-interest bearing and repayable on demand. The carrying amount of these non-interest
bearing trade and other payables approximates their fair value.
1In the normal course of business the Company will receive and reimburse amounts for services provided to, and received from,
Group entities.
35 ORDINARY SHARES
Allotted, called up and fully paid shares of 1 pence
As at 1 April
Issued during the year
As at 31 March
2022
Shares
2022
£’000
2021
Shares
61,058,960
610
55,512,061
193,204
2
5,546,899
61,252,164
612
61,058,960
2021
£’000
555
55
610
36 RELATED PARTY TRANSACTIONS
In the normal course of business the Company will receive and reimburse amounts for services provided to, and received from,
Group entities. As at 31 March 2022 the Company owed the following intercompany balances to:
Liontrust Investment Partners LLP - £6,257,000 (2021: £5,459,000).
Liontrust Investment Funds Limited - £NIL (2021: £3,996,000).
Liontrust Investment Management Limited - £1,759,000 (2021: £1,843,000).
Liontrust Multi-Asset Limited - £20,609,000 (2021: £6,334,000).
Liontrust Advisory Services Limited - £1,282,000 (2021: £nil).
As at 31 March 2022 the Company was owed the following intercompany balances by:
Liontrust Fund Partners LLP - £15,115,000 (2021: £19,835,000).
Liontrust Investment Services Limited - £3,585,000 (2021: £2,556,000)
The Liontrust Asset Management Employee Trust - £10,241,000 (2021: £4,992,000).
37 AUDIT FEES
Amounts receivable by the Company’s auditor and its associates in respect of services to the Company and its associates, other
than the audit of the Company’s financial statements, have not been disclosed as the information is required instead to be disclosed
on a consolidated basis in the consolidated financial statements (note 6).
183
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
LIONTRUST ASSET MANAGEMENT PLC
1. OUR OPINION IS UNMODIFIED
We have audited the financial statements of Liontrust Asset Management Plc (“the Company”) for the year ended 31 March 2022
which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Cash
Flow Statement, the Consolidated Statement of Changes in Equity, the Company Balance sheet, the Company Cash Flow Statement,
the Company Statement of Changes in Equity and the related notes, including the accounting policies in notes 1 and 27.
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at 31 March
2022 and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with UK- adopted international accounting standards;
• the parent Company financial statements have been properly prepared in accordance with UK- adopted international accounting
standards and as applied in accordance with the provisions of the Companies Act 2006;and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis
for our opinion. Our audit opinion is consistent with our report to the audit and risk committee.
We were first appointed as auditor by the directors on 4 November 2020. The period of total uninterrupted engagement is for
the two financial years ended 31 March 2022. We have fulfilled our ethical responsibilities under, and we remain independent
of the Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed public interest
entities. No non-audit services prohibited by that standard were provided.
Overview
Materiality:
group financial statements as a whole
Coverage
Key audit matters
New risks (Group)
Recoverability of Architas Goodwill
and Intangible Assets
£4.0m (2021:£2.6m)
5% (2021: 5% normalised) of profit before tax
100% (2021: 95%) of group profit before tax
vs 2021
Recurring risk (Parent)
Recoverability of parent Company’s investment in
subsidiary undertakings
2.KEY AUDIT MATTERS: OUR ASSESSMENT OF RISKS OF MATERIAL MISSTATEMENT
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial
statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us,
including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the
efforts of the engagement team. We summarise below the key audit matters, in decreasing order of audit significance, in arriving at
our audit opinion above, together with our key audit procedures to address those matters and our findings from those procedures in
order that the Company’s members, as a body, may better understand the process by which we arrived at our audit opinion. These
matters were addressed, and our findings are based on procedures undertaken, in the context of, and solely for the purpose of, our
audit of the financial statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and
we do not provide a separate opinion on these matters.
184 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS The risk
Our response
Recoverability of Architas
Forecast based assessment:
We performed the tests below rather than seeking
Goodwill and Intangible Assets
The Group’s intangible assets include investment
(Goodwill £8.0 million; 2021:
management contracts recognised as a result
£8.0 million; Intangible Assets
of the acquisition of Architas Multi- Manager
£46.5 million; 2021: £51.9
Limited and Architas Advisory Services Limited
to rely on any of the Group’s controls because
the nature of the balance is such that we would
expect to obtain audit evidence primarily through
the detailed procedures described.
million)
(“Architas”) in October 2020.
Our procedures included:
Refer to page 103 (Audit and
During our planning phase of our audit
Valuation expertise: We critically assessed the key
Risk Committee Report), page
indicators of impairment relating to reductions in
assumptions underpinning the Group’s value in use
144 (accounting policy) and
assets under management (AUM) which impact
models including the discount rate, the terminal
pages 162 and 163 (financial
revenues and accordingly an impairment
growth rate, if applicable, and AUM growth rates.
disclosures).
review was undertaken.
The Architas goodwill recognised in the
Group financial statements is also at risk of
Our challenge was based on historical experience
and market comparable data obtained publicly or
through internally derived data.
irrecoverability due to the performance of
We engaged our own valuation specialists to
the Cash Generating Unit (“CGU”) since
assist us in assessing the appropriateness of the
acquisition.
The estimated recoverable amount in an
impairment review involves a number of
assumptions to be made by the Group. This
makes any assessment subjective due to the
Group’s valuation model. This included comparing
the Group’s discount rate and terminal growth rate
assumptions with our own estimate of a range of
reasonable discount rates and terminal growth
rates, based on comparable company information
inherent uncertainty involved in forecasting
Sensitivity analysis: We challenged the Group’s
and discounting future cash flows. The key
sensitivity analysis and performed our own
assumptions that give rise to a significant risk
sensitivity analysis, which included assessing the
are the discount rate and AUM growth rates
effect of the reasonably possible reductions in
for both the recoverability of Architas Goodwill
discount rate, terminal growth rate, and AUM
and Architas Intangible, and the terminal
growth rates to evaluate the impact on the current
growth rate for the recoverability of the Architas
head room.
Goodwill only.
Assessing transparency: we considered whether
The effect of these matters is that, as part of
the Group’s disclosures in relation to the
our risk assessment, we determined that the
assumptions used in goodwill and intangible
value in use of these assets has a high degree
assets impairment adequately reflect the
of estimation uncertainty; with a potential
sensitivities of the goodwill and intangible assets
range of reasonable outcomes greater than
to the use of alternative assumptions.
our materiality for the financial statements and
possibly many times that amount.
Our findings
We found the directors’ initial estimate of
The financial statements (note 14 and 15)
recoverable amount to be at the outside the
disclose the sensitivities estimated by the
range we consider to be acceptable. As a
Group.
result, the directors’ revised their estimate of
recoverable amount and then used this revised
estimate for the purpose of the disclosures now
made in notes 14 and 15.
We found the Group’s conclusion that there is no
impairment of Architas goodwill and intangible
assets to be balanced with proportionate
disclosure of the related assumptions and
sensitivities.
185
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS The risk
Our response
Recoverability of parent Company’s
Low risk, high value
investment in subsidiary undertakings
The carrying amount of the parent
(Investment in subsidiary undertakings
Company’s investment in subsidiary
£142.9 million; 2021: £153.2million)
undertakings represents 71% (2021:79%)
Refer to page 179 (accounting policy) and
page 182 (financial disclosures).
of the parent Company’s total assets.
Their recoverability is not at a high risk
We performed the tests below rather than
seeking to rely on any of the Group’s
controls because the nature of the balance
is such that we would expect to obtain audit
evidence primarily through the detailed
procedures described.
of significant misstatement or subject to
Our procedures included:
significant judgement. However due to
their materiality in the context of the parent
Company financial statements, this is
considered to the area of most focus in the
overall parent Company audit.
Tests of detail: We compared the carrying
amount of 100% of investment balance
with the relevant subsidiaries’ draft balance
sheet to identify whether their net assets,
plus intangibles and goodwill recognised
on consolidation, being an approximation
of their minimum recoverable amount, were
in excess of their carrying amount and
assessing whether those subsidiaries have
historically been profit- making.
Our findings
We found the Company’s conclusion
that, apart from the identified impairment
recognised in the year, there is no
other impairment of the investment in
subsidiary undertakings to be balanced
(2021:balanced).
We continue to perform procedures over the recoverability of Neptune Intangible Assets and recoverability of Neptune Goodwill.
However, as there were no impairment indicators and the headroom between the value in use and the carrying value of the
Neptune Intangible Assets and Goodwill increased due to performance of the business, we have not assessed these as significant
risks in our current year audit and, therefore, they are not separately identified as key audit matters in our report this year.
186 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS Group profit before tax (2021:
Normalised group profit before
tax)
£79.4m (2021: £51.7m)
Group materiality
£4.0m (2021: £2.6 m)
£4.0m
Whole financial
statements materiality (2021:
£2.6m)
£2.6m
Whole financial
statements performance
materiality (2021: £1.7m)
PBT
Group materiality
£0.2m
Misstatements reported to the
audit committee (2021: £0.1m)
Group revenue
Group profit before tax
98%
(2021 98%)
98
98
100%
(2021 95%)
95
100
Group total assets
96%
(2021 100%)
100
96
Key:
Full scope for group audit purposes 2022
Full scope for group audit purposes 2021
Residual components
3.OUR APPLICATION OF MATERIALITY AND AN
OVERVIEW OF THE SCOPE OF OUR AUDIT
Materiality for the Group financial statements as a whole was
set at £4.0m (2021: £2.6m), determined with reference to
a benchmark of Group profit before tax (2021: Group profit
before tax normalised to exclude costs in relation to the
Neptune and Architas acquisitions as disclosed in note 7) of
which it represents 5% (2021: 5%).
Materiality for the parent Company financial statements as a
whole was set at £2.0m (2021: £1.7m), determined with
reference to a benchmark of the parent Company total assets,
of which it represents 1% (2021: 1%).
In line with our audit methodology, our procedures on
individual account balances and disclosures were performed
to a lower threshold, performance materiality, so as to reduce
to an acceptable level the risk that individually immaterial
misstatements in individual account balances add up to a
material amount across the financial statements as a whole.
Performance materiality was set at 65% (2021: 65%) of
materiality for the financial statements as a whole, which
equates to £2.6m (2021: £1.7m) for the Group and £1.3m
(2021: £1.1m) for the parent Company. We applied this
percentage in our determination of performance materiality
based on identified immaterial unadjusted differences and
control deficiencies noted during the prior period.
We agreed to report to the Audit & Risk Committee any
corrected or uncorrected identified misstatements exceeding
£0.2m (2021: £0.1m), in addition to other identified
misstatements that warranted reporting on qualitative grounds.
The scope of the audit work performed was predominately
substantive as we placed limited reliance upon the Group’s
internal control over financial reporting.
Of the Group’s 9 (2021: 11) reporting components, we
subjected 3 (2021: 4) to full scope audits for group purposes.
The range of materiality at 3 (2021: 4) components was
£1.9m to £3.3m (2021: £0.4m to £2.0m)
The components within the scope of our work accounted for
the percentages illustrated opposite.
The remaining 2% (2021: 2%) of total Group revenue, 0%
(2021: 5%) of Group profit before tax and 4% (2021: 0%)
of total Group assets is represented by 6 (2021: 7) reporting
components, none of which individually represented more
than 3% (2021: 6%) of any of total Group revenue, Group
profit before tax or total Group assets. For these components,
we performed analysis at an aggregated Group level to re-
examine our assessment that there were no significant risks of
material misstatement within these.
The work on all of the components, including the audit of the
parent Company, was performed by the Group team.
187
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS 4.THE IMPACT OF CLIMATE CHANGE ON OUR AUDIT
In planning our audit, we have considered the potential impact
of climate change on the Group’s business and its financial
statements including the impact on the portfolios it manages
on behalf of investors, potential reputational risk associated
with the Group’s delivery of its climate related initiatives, and
greater emphasis on climate related narrative and disclosure
in the annual report.
As a part of our audit, we have made enquiries of management
to understand the extent of the potential impact of climate
change risk on the Group’s financial statements and the
Group’s preparedness for this and we have performed a risk
assessment. We have not assessed climate related risk to be
significant to our audit or key audit matters.
We have also read the disclosure of climate related information
in the front half of the annual report as set out on pages 52 to
74 and considered consistency with the financial statements
and our audit knowledge.
5. GOING CONCERN
The directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the
Group or the parent Company or to cease their operations,
and as they have concluded that the Group’s and the parent
Company’s financial position means that this is realistic. They
have also concluded that there are no material uncertainties
that could have cast significant doubt over their ability to
continue as a going concern for at least a year from the date
of approval of the financial statements (“the going concern
period”).
We used our knowledge of the Group, its industry and
operating model, and the general economic environment to
identify the inherent risks to its business model and analysed
how those risks might affect the Group’s and the parent
Company’s financial resources or ability to continue operations
over the going concern period. The risk that we considered
most likely to adversely affect the Group’s and parent
Company’s available financial resources over this period was
the impact of significant adverse market movements on assets
under management.
We considered whether reasonable, but plausible downside
assumptions over asset under management levels could result
in insufficient financial resources being available to settle
financial obligations as they fall due for a period of at least
12 months from the date of the approval of these financial
statements.
We considered whether the going concern disclosure in
note 1b to the financial statements gives a full and accurate
description of the Director’s assessment of going concern
including the identified risks, dependencies and related
sensitivities.
We assessed the completeness of the going concern disclosure.
Our conclusions based on this work:
• we consider that the directors’ use of the going concern
basis of accounting in the preparation of the financial
statements is appropriate;
• we have not identified, and concur with the directors’
assessment that there is not, a material uncertainty related to
events or conditions that, individually or collectively, may cast
significant doubt on the Group’s or parent Company’s ability
to continue as a going concern for the going concern period;
• we have nothing material to add or draw attention to in
relation to the directors’ statement in note 1(b) to the
financial statements on the use of the going concern basis
of accounting with no material uncertainties that may cast
significant doubt over the Group and parent Company’s use
of that basis for the going concern period, and we found the
going concern disclosure in note 1(b) to be acceptable; and
• the related statement under the Listing Rules set out on page
29 is materially consistent with the financial statements and
our audit knowledge.
However, as we cannot predict all future events or conditions
and as subsequent events may result in outcomes that are
inconsistent with judgements that were reasonable at the time
they were made, the above conclusions are not a guarantee
that the Group or the parent Company will continue in
operation.
188 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS
6.FRAUD AND BREACHES OF LAWS AND REGULATIONS
– ABILITY TO DETECT
Identifying and responding to risks of material misstatement
due to fraud
To identify our risks of material misstatement due to fraud (“fraud
risks”) we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity
to commit fraud. Our risk assessment procedures included:
• Enquiring of directors, the Group Audit & Risk Committee,
Group Internal Audit, Group Compliance, Group Risk,
inspection of policy documentation as to the Group’s high-
level policies and procedures to prevent and detect fraud,
including internal audit reports, and the Group’s channel for
‘whistleblowing’, as well as whether they have knowledge
of any actual, suspected or alleged fraud identifying and
responding to risks of material misstatement due to fraud;
• Reading Board minutes and reading and attending Group
Audit & Risk Committee meetings; and
• Considering
schemes
performance targets for management and directors.
remuneration
incentive
and
We communicated identified fraud risks throughout the audit
team and remained alert to any indications of fraud throughout
the audit.
As required by auditing standards, and taking into account
possible pressures to meet profit targets, we perform procedures
to address the risk of management override of controls, in
particular the risk that Group and component management
may be in a position to make inappropriate accounting entries
and the risk of bias in accounting estimates and judgements
such as the recoverability of Architas intangible assets and the
recoverability of the Architas goodwill.
On this audit we do not believe there is a fraud risk related
to revenue recognition because there is limited management
judgement involved in the valuation of AUM and recognition
of all material revenue streams.
We did not identify any additional fraud risks.
We performed procedures including:
• Identifying journal entries and other adjustments to test for all
full scope components based on risk criteria and comparing
the identified entries to supporting documentation. These
included, but were not limited to, journals impacting cash
and revenue balances that were identified as unusual or
unexpected in our risk assessment procedures.
• Assessing significant accounting estimates for bias.
Identifying and responding to risks of material misstatement
due to non-compliance with laws and regulations
We identified areas of laws and regulations that could
reasonably be expected to have a material effect on the
financial statements from our general commercial and sector
experience and through discussion with the directors and other
management (as required by auditing standards), and from
inspection of the Group’s regulatory and legal correspondence
and discussed with the directors and other management the
policies and procedures regarding compliance with laws and
regulations.
As the Group is regulated, our assessment of risks involved
the control environment
gaining an understanding of
including the entity’s procedures for complying with regulatory
requirements.
We communicated identified laws and regulations throughout
our team and remained alert to any indications of non-
compliance throughout the audit.
The potential effect of these laws and regulations on the
financial statements varies considerably. Firstly, the Group is
subject to laws and regulations that directly affect the financial
statements including financial reporting legislation (including
related companies legislation), distributable profits legislation,
taxation legislation) and we assessed the extent of compliance
with these laws and regulations as part of our procedures on
the related financial statement items.
Secondly, the Group is subject to many other laws and
regulations where the consequences of non-compliance could
have a material effect on amounts or disclosures in the financial
statements, for instance through the imposition of fines or
litigation. We identified the following areas as those most
likely to have such an effect: the Listing Rules and Disclosure
Guidance and Transparency Rules, specific areas of regulatory
capital and liquidity, conduct including Client Assets, TCFD,
money laundering, market abuse regulations and certain
aspects of company legislation recognising the financial and
regulated nature of the Group’s activities and its legal form.
Auditing standards limit the required audit procedures to
identify non-compliance with these laws and regulations to
enquiry of the directors and other management and inspection
of regulatory and legal correspondence, if any. Therefore if
a breach of operational regulations is not disclosed to us or
evident from relevant correspondence, an audit will not detect
that breach.
We assessed the legality of the distributions in the period
based on the level of distributable profits.
Context of the ability of the audit to detect fraud or breaches
of law or regulation
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance
with auditing standards. For example, the further removed
non-compliance with laws and regulations is from the events
and transactions reflected in the financial statements, the less
189
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS
likely the inherently limited procedures required by auditing
standards would identify it.
In addition, as with any audit, there remained a higher risk of
non- detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls.
Our audit procedures are designed to detect material
misstatement. We are not responsible for preventing non-
compliance or fraud and cannot be expected to detect non-
compliance with all laws and regulations.
7. WE HAVE NOTHING TO REPORT ON THE OTHER
INFORMATION IN THE ANNUAL REPORT
The directors are responsible for the other information presented
in the Annual Report together with the financial statements.
Our opinion on the financial statements does not cover the
other information and, accordingly, we do not express an
audit opinion or, except as explicitly stated below, any form of
assurance conclusion thereon.
Our responsibility is to read the other information and, in
doing so, consider whether, based on our financial statements
audit work, the information therein is materially misstated
or inconsistent with the financial statements or our audit
knowledge. Based solely on that work we have not identified
material misstatements in the other information.
Strategic report and directors’ report
Based solely on our work on the other information:
• we have not identified material misstatements in the strategic
report and the directors’ report;
• in our opinion the information given in those reports for the
financial year is consistent with the financial statements; and
• in our opinion those reports have been prepared in
accordance with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report
to be audited has been properly prepared in accordance with
the Companies Act 2006.
Disclosures of emerging and principal risks and longer-term
viability
We are required to perform procedures to identify whether
there is a material inconsistency between the directors’
disclosures in respect of emerging and principal risks and the
viability statement, and the financial statements and our audit
knowledge.
Based on those procedures, we have nothing material to add
or draw attention to in relation to:
• the directors’ confirmation within the viability statement on
page 29 that they have carried out a robust assessment
of the emerging and principal risks facing the Group,
including those that would threaten its business model, future
performance, solvency and liquidity;
• the disclosures describing these risks and how emerging
risks are identified, and explaining how they are being
managed and mitigated; and
• the directors’ explanation in the viability statement of how
they have assessed the prospects of the Group, over what
period they have done so and why they considered that
period to be appropriate, and their statement as to whether
they have a reasonable expectation that the Group will
be able to continue in operation and meet its liabilities as
they fall due over the period of their assessment, including
any related disclosures drawing attention to any necessary
qualifications or assumptions.
We are also required to review the Statement of viability, set
out on page 29 under the Listing Rules. Based on the above
procedures, we have concluded that the above disclosures
are materially consistent with the financial statements and our
audit knowledge.
Our work is limited to assessing these matters in the context of
only the knowledge acquired during our financial statements
audit. As we cannot predict all future events or conditions
and as subsequent events may result in outcomes that are
inconsistent with judgements that were reasonable at the time
they were made, the absence of anything to report on these
statements is not a guarantee as to the Group’s and parent
Company’s longer-term viability.
Corporate governance disclosures
We are required to perform procedures to identify whether
there is a material inconsistency between the directors’
corporate governance disclosures and the financial statements
and our audit knowledge.
Based on those procedures, we have concluded that each
of the following is materially consistent with the financial
statements and our audit knowledge:
• the directors’ statement that they consider that the annual
report and financial statements taken as a whole is fair,
balanced and understandable, and provides the information
necessary for shareholders to assess the Group’s position
and performance, business model and strategy;
• the section of the annual report describing the work of the
Audit and Risk Committee, including the significant issues
that the audit committee considered in relation to the financial
statements, and how these issues were addressed; and
• the section of the annual report that describes the review
of the effectiveness of the Group’s risk management and
internal control systems.
We are required to review the part of the Corporate
Governance Statement relating to the Group’s compliance
with the provisions of the UK Corporate Governance Code
specified by the Listing Rules for our review. We have nothing
to report in this respect.
190 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS
8.WE HAVE NOTHING TO REPORT ON THE OTHER
MATTERS ON WHICH WE ARE REQUIRED TO REPORT
BY EXCEPTION
Under the Companies Act 2006, we are required to report to
you if, in our opinion:
• adequate accounting records have not been kept by the
parent Company, or returns adequate for our audit have not
been received from branches not visited by us; or
• the parent Company financial statements and the part of
the Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by
law are not made; or
• we have not received all the information and explanations
we require for our audit.
We have nothing to report in these respects.
9.RESPECTIVE RESPONSIBILITIES
Directors’ responsibilities
As explained more fully in their statement set out on page
87, the directors are responsible for: the preparation of the
financial statements including being satisfied that they give a
true and fair view; such internal control as they determine is
necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud
or error; assessing the Group and parent Company’s ability
to continue as a going concern, disclosing, as applicable,
matters related to going concern; and using the going concern
basis of accounting unless they either intend to liquidate the
Group or the parent Company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue our opinion in an auditor’s report. Reasonable assurance
is a high level of assurance, but does not guarantee that an
audit conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material
if, individually or in aggregate, they could reasonably be
expected to influence the economic decisions of users taken
on the basis of the financial statements.
A fuller description of our responsibilities is provided on the
FRC’s website at www.frc.org.uk/auditorsresponsibilities.
The Company is required to include these financial statements
in an annual financial report prepared using the single
electronic reporting format specified in the TD ESEF Regulation.
This auditor’s report provides no assurance over whether the
annual financial report has been prepared in accordance with
that format.
10. THE PURPOSE OF OUR AUDIT WORK AND TO
WHOM WE OWE OUR RESPONSIBILITIES
This report is made solely to the Company’s members, as
a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006 and the terms of our engagement by the
Company. Our audit work has been undertaken so that we
might state to the Company’s members those matters we are
required to state to them in an auditor’s report, and the further
matters we are required to state to them in accordance with
the terms agreed with the Company, and for no other purpose.
To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and
the Company’s members, as a body, for our audit work, for
this report, or for the opinions we have formed.
Jatin Patel (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
E14 5GL
21 June 2022
191
LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
DIRECTORS AND ADVISERS
Registered Office and Company number
2 Savoy Court, London WC2R 0EZ
Registered in England with Company Number 02954692
Share price information:
The Company’s shares are quoted on the London Stock
Exchange and the price appears daily in The Financial
Times, (listed under ‘General Financial’).
Company Secretary
Mark Jackson
2 Savoy Court
London
WC2R 0EZ
Independent Auditor
KPMG LLP
15 Canada Square,
London,
E14 5GL
Banker
Royal Bank of Scotland Plc
280 Bishopsgate
London EC2M 4RB
Financial Adviser and Corporate Broker
Panmure Gordon & Co
One New Change,
London EC4M 9AF
Singer Capital Markets
1 Bartholomew Lane
London EC2N 2AX
Legal Advisers
Macfarlanes LLP
20 Cursitor Street
London EC4A ILT
Simmons & Simmons LLP
City Point, 1 Ropemaker Street
London EC2Y 9SS
Financial Calendar
Year End
Half Year End
Results announced:
31 March
30 September
Full year: June,
half year: November
Interim report available: December
Annual Report available:
Annual General Meeting: September
July
UK authorised unit trusts:
Liontrust UK Growth Fund
Liontrust UK Smaller Companies Fund
Liontrust UK Micro Cap Fund
Liontrust Special Situations Fund
Liontrust European Growth Fund
Liontrust Balanced Fund
Liontrust Investment Funds ICVC, comprising 2 sub funds
Liontrust Monthly Income Bond Fund
Liontrust Strategic Bond Fund
Liontrust Investment Funds II OEIC, comprising 2 sub funds
Liontrust Emerging Markets Fund
Liontrust Global Smaller Companies Fund
Liontrust Sustainable Future ICVC, comprising 9 sub funds
Liontrust Sustainable Future Managed Growth Fund
Liontrust Sustainable Future Cautious Managed Fund
Liontrust Sustainable Future Corporate Bond Fund
Liontrust Sustainable Future Defensive Managed Fund
Liontrust Sustainable Future European Growth Fund
Liontrust Sustainable Future Global Growth Fund
Liontrust Sustainable Future Managed Fund
Liontrust Sustainable Future UK Growth Fund
Liontrust UK Ethical Fund
Liontrust Investment Funds IV OEIC, comprising 2 sub funds
Liontrust Global Technology Fund
Liontrust Japan Equity Fund
Liontrust Investment Funds OEIC, comprising 9 sub funds
Liontrust China Fund
Liontrust Global Alpha Fund
Liontrust Global Innovation Fund (formerly Liontrust Global
Equity Fund)
Liontrust Global Dividend Fund
Liontrust Income Fund
Liontrust India Fund
Liontrust Latin America Fund
Liontrust Russia Fund
Liontrust US Opportunities Fund
192 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS
Fund prices:
The prices of Liontrust’s range of retail funds are listed on our
website www.liontrust.co.uk.
Further information:
For further information on the Company’s range of funds and
services please contact our Broker Services Department at:
Liontrust Fund Partners LLP
2 Savoy Court
London WC2R 0EZ
Telephone: 020 7412 1700
Facsimile: 020 7412 1779
e-mail: info@liontrust.co.uk
or visit: www.liontrust.co.uk
Liontrust Multi Asset Investments II ICVC,
OEIC comprising 8 sub funds
Liontrust MA Blended Intermediate Fund
Liontrust MA Blended Reserve Fund
Liontrust MA Monthly High Income Fund
Liontrust MA UK Equity Fund
Liontrust MA Blended Moderate Fund
Liontrust MA Strategic Bond Fund
Liontrust MA Blended Growth Fund
Liontrust MA Blended Progressive Fund
Liontrust Global Funds PLC,
Ireland domiciled OEIC, comprising 12 sub funds
Liontrust GF European Strategic Equity Fund
Liontrust GF Special Situations Fund
Liontrust GF UK Growth Fund
Liontrust GF European Smaller Companies Fund
Liontrust GF Strategic Bond Fund
Liontrust GF Sustainable Future European Corporate Bond Fund
Liontrust GF High Yield Bond Fund
Liontrust GF Absolute Return Bond Fund
Liontrust GF Sustainable Future Pan-European Growth Fund
Liontrust GF Sustainable Future Global Growth Fund
Liontrust GF Russia Fund
Liontrust GF Sustainable Multi Asset Global Fund
Liontrust Multi Asset Investments ICVC, OEIC comprising 5
sub funds
Liontrust MA Active Dynamic Fund
Liontrust MA Active Growth Fund
Liontrust MA Active Intermediate Income Fund
Liontrust MA Active Moderate Income Fund
Liontrust MA Active Progressive Fund
Liontrust Multi Asset Global Solutions ICVC,
OEIC comprising 9 sub funds
Liontrust MA Passive Prudent Fund
Liontrust MA Passive Reserve Fund
Liontrust MA Passive Moderate Fund
Liontrust MA Passive Intermediate Fund
Liontrust MA Passive Progressive Fund
Liontrust MA Passive Growth Fund
Liontrust MA Passive Dynamic Fund
Liontrust MA Active Reserve Fund
Liontrust MA Diversified Real Assets Fund
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LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022FINANCIAL STATEMENTS
GROUP SUBSIDIARY ENTITIES – BOARD MEMBERS
Liontrust Investment Funds Limited
V.K. Abrol
J.S. Ions
Liontrust Fund Partners LLP
A list of members is open for inspection at 2 Savoy Court,
London WC2R 0EZ
Liontrust Investment Services Limited
V.K. Abrol
J.S. Ions
Liontrust Investment Partners LLP
A list of members is open for inspection at 2 Savoy Court,
London WC2R 0EZ
Liontrust Investment Management Limited
E.J.F Catton
M.F. Kearney
Liontrust International (Luxembourg) SA
E.J.F Catton
M.F. Kearney
J. Beddall
Liontrust Multi-Asset Limited
E.J.F Catton
M.F. Kearney
Liontrust Advisory Services Limited
E.J.F Catton
M.F. Kearney
INVESTMENT COMPANIES – BOARD MEMBERS
Liontrust Global Funds Plc
E.J.F. Catton
D.J. Hammond
M.F. Kearney
S. O’Sullivan
D. Reidy
194 LIONTRUST ASSET MANAGEMENT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
FINANCIAL STATEMENTS
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