Liontrust’s boss has defended its strategy of mergers and acquisitions, despite a £10mn fall in profits and outflows of £3.2bn over six months.
It saw losses before tax of £10.1mn in the six months to September 2023, compared with a profit in £14.1mn in the same period last year.
The firm’s half year results show it had a gross profit of £98.6mn, compared to 108.8 million in the same period a year earlier, a decrease of nine per cent.
The period saw net outflows of £3.2bn, a significant increase from the £2.2bn seen in the first half of 2022.
There was also a fall in assets under management of 12 per cent in the six months to September to £27.7bn.
As of November 9 assets under management stood at £26.6bn.
Liontrust chief executive, John Ions, said the six months marked a challenging period across asset management, adding that net outflows of £1.4bn were seen across the industry in the quarter, according to the Investment Association.
In August, Liontrust’s £96mn bid to buy Gam was unsuccessful after it failed to get enough support from shareholders.
Despite this set back, Ions has stood by the company’s ambition to “broaden distribution internationally”.
Non-executive chairperson Alastair Barbour said the board is “pleased that Liontrust attempted to acquire GAM and remained resolute in sticking to a price that we believe was fair for the value of the business”.
He added the deal not going through was a better outcome than completing a deal at the “wrong price for Liontrust”.
In a statement, Ions said: “Liontrust has partly grown through acquisitions and they have made it a better business by broadening the pool of talent, and enhancing product development and the infrastructure of the business, including client service.
“Our focus is clear and we are committed to navigating the current headwinds and emerging with the business stronger than ever. There are a number of areas we are prioritising to achieve our strategic objectives.
“We are seeking to further broaden our investment talent and product offering, which follows an optimisation of the current fund range.
“A key part of our strategy is to broaden distribution internationally. This requires not only having the appropriate infrastructure but also the product range to meet demand, which will benefit from further diversification of asset classes.”
Peel Hunt analysts said positive management at the firm was softening the impact of a weak market.
While analysts from Panmure Gordon also recognised the “tough environment” for the UK funds market.
The analysts added: As we have written before, the approach for GAM was completely consistent with the company’s stated strategy, would have been a material step forward in many ways, but ultimately failed because Liontrust would not offer as much as NewGAMe thought the business was worth.
“Being the underbidder is not a problem, we believe.
“There are reasons to believe that sentiment towards the UK equity market will shift back from current, utterly depressed, levels and when that happens we expect Liontrust to be a material beneficiary on a business model which has driven ever greater efficiencies.”
