Fund manager Liontrust Asset Management (LIO:AIM) jumps 2.0% to 260p on the back of today's better-than-expected finals. The strong numbers – and particularly so at the cashflow level – could prompt the group to increase dividend payments at a faster rate than is currently being projected by the market.
Revenues were significantly ahead of forecasts, while underlying pre-tax profits, at £8.4 million, marginally beat the £8.3 million forecast by N+1 Singer as a result of the firm’s variable remuneration structure. The strong performance does raise the possibility of the dividend payouts being ramped up, says the broker.
Consensus currently anticipates 3.7p of distributions in 2014/15, although N+1 Singer is ahead of that at 4.5p but may adjust this forecast up. Liontrust, whose funds have a strong slant towards equities, had £3.6 billion of assets under management at its year end (31 Mar), up 19% from 2013’s £3 billion, with the larger part of the gains achieved by net inflows of £381 million while the FTSE All-Share advanced just 5.6%.
The business’ high operational gearing meant a 39% increase in revenues filtered down into a 122% rise in pre-tax profits at what is also a highly cash-generative business, with net cash ending the period at £15.3 million. Says N+1 Singer analyst Andrew Watson: ‘We believe that the board will look to return cash to investors in greater amounts now that a significant cash buffer has been accumulated.'