Source - RNS
RNS Number : 2535K
Lighthouse Group PLC
20 September 2016
 

 

 

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014

 

Press Release

20 September 2016

 

Lighthouse Group plc

("Lighthouse" or "the Group")

Interim Results

 

Lighthouse Group plc (AIM: LGT) today announces its interim results for the six months ended 30 June 2016.

 

Highlights

Revenues for the six months to 30 June 2016 of £23.78 million (H1 2015: £23.94 million);

Average annualised revenue production per adviser increased by 6 per cent. to £96,000 (H1 2015: £91,000);

Gross margins in 2016 were 30.0 per cent. (H1 2015: 30.3 per cent.);

Operating expenses reduced by £418,000 to £6.13 million (H1 2015: £6.55 million);

EBITDA* increased 40 per cent. to £1.01 million (H1 2015: £0.72 million);

Pre-tax profits increased by £470,000 (131 per cent.) to £829,000 (H1 2015: £359,000);

Basic earnings per share increased by 132 per cent. to 0.65 pence per share (H1 2015: 0.28 pence per share);

Net cash balances increased by £0.6 million to £7.5 million (H1 2015: £6.9 million);

Interim dividend declared of 0.09 pence per share, an increase of 13 per cent. (H1 2015: 0.08 pence per share); and

New affinity contracts secured with the University and College Union and Foster Talk.

*Earnings Before Interest, Tax, Depreciation and Amortisation

Post Period End Highlights

Launch of Luceo Asset Management

 

 

Commenting on the results, Richard Last, Chairman of Lighthouse Group plc, said:

"The unaudited results for the six months ended 30 June 2016 highlight the continued progression of the Group's activities and the focus on sustainable operational efficiency, with EBITDA for the six months increasing by 40 per cent. to over £1 million. Continued progress in developing proprietary auto-enrolment and investment products is expected to contribute to future growth in profits."

 

 

For further information, please contact:

Lighthouse Group plc


Malcolm Streatfield, Chief Executive

Tel: +44 (0) 20 7065 5640

[email protected]


Peter Smith, Finance Director

Tel: +44 (0) 13 9245 7850

[email protected]


www.lighthousegroup.plc.uk


 

finnCap Limited

 

Tel: +44 (0) 20 7220 0500

(Nominated Adviser to the Company)


Adrian Hargrave


Emily Watts


 

Media enquiries:


IFC Advisory Limited


Graham Herring

Tim Metcalfe

Heather Armstrong

Tel: +44 (0) 20 3053 8671

[email protected]

www.investor-focus.co.uk

 



 

Chairman's statement for the six months ended 30 June 2016

Trading highlights   


Unaudited

Unaudited


6 months to 30 June 2016

6 months to 30 June 2015



Revenue

£23.78 million

£23.94 million

Gross profit

£7.14 million

£7.27 million

Operating costs

£6.13 million

£6.55 million

EBITDA *

£1.01 million

£0.72 million

Profit before taxation

£829,000

£359,000

Earnings per share (basic)

0.65p

0.28p

Earnings per share (diluted)

0.63p

0.28p

 

* Earnings Before Interest, Tax, Depreciation and Amortisation.

 

Financial performance

I am pleased to report that Lighthouse has made good progress in the six months to 30 June 2016.  Whilst revenues reduced marginally in comparison with the same period in 2015, this was primarily as a result of a reduction of £0.5 million in trail receipts from platform-based providers following the sunset clause introduced by the Financial Conduct Authority ("FCA") becoming fully effective from 1 April 2016. This was largely offset on a revenue basis by an increase of 6 per cent. in average annualised revenue production per adviser to £96,000 in comparison with £91,000 in the first half of 2015. The reduction in operating costs achieved through focus on cost efficiency was significant in helping us to achieve our profitability.

 

The Group continues its engagement with clients in Middle Britain and other areas to provide effective advice, notwithstanding on-going regulatory changes and uncertainty.

 

Recurring revenue accounted for 48 per cent. of all Group revenue derived from customers and amounted to £10.5 million (including on-going fees of £6.9 million) in the period to 30 June 2016, (2015: £10.9 million including on-going fees of £5.6 million). The small reduction in recurring revenue was as a result of the removal of platform-based trail income, as noted above.

 

Gross margin was maintained at 30 per cent. but reduced marginally to £7.14 million from £7.27 million in 2015, with the increased contribution to revenues achieved by the Group's own value-added businesses, Lighthouse Financial Advice ("LFA"), LighthouseCarrwood ("Carrwood") and LighthouseWealth ("Wealth") broadly offsetting the reduction in platform-based trail income referred to above.

 

Operating costs reduced by £0.42 million to £6.13 million in comparison with £6.55 million in 2015, primarily as a result of improved debt recovery and an improved complaints experience offsetting increases in regulatory fees and one-off costs of exiting historic file storage facilities.

 

EBITDA for the period amounted to £1.01 million, an increase of £287,000 (40 per cent.) from the £723,000 recorded in the comparative period in 2015, principally as a result of the reduction in operating costs.  EBITDA for the period benefited from a release of £375,000 in respect of old unallocated commission accruals (2015: £Nil), although this was offset by £434,000 expensed as a result of the Group continuing to invest in and expense equivalent amounts in the development of both its auto-enrolment and mortgage and protection offerings, as well as in infrastructure improvements and new product development. 

 

After deduction of depreciation, amortisation and net finance costs, the Group recorded a profit before and after taxation of £829,000 (2015: £359,000), with basic earnings per ordinary share of 0.65 pence (2015: 0.28 pence).

 

Financial position and cash flow

The Group continues to maintain a strong balance sheet with net cash reserves amounting to £7.5 million at 30 June 2016 (30 June 2015: £6.9 million, 31 December 2015: £7.9 million). The small reduction since 1 January 2016 is as a result of the payment of the final dividend for 2015 of £204,000 in April 2016 and settlement of redress cases provided for in prior periods of £703,000.

 

Business relationships and developments

Affinity relationships continue to be an important component of the Group's operations, particularly in Lighthouse Financial Advice (our national division). Gross revenues derived from such sources increased to £3.32 million in the six months to 30 June 2016 in comparison with £3.18 million in the first half of 2015, an increase of 4.3 per cent. and amounted to 14 per cent. of Group revenues in the half year (2015: 13.2 per cent.).

 

The Group continues to secure new affinity relationships with new contracts being secured to provide financial advice to the members of the University and College Union for a minimum period of three years from 1 February 2016 and Foster Talk Limited, which provides professional support to more than 30,000 foster carers across the UK, for a minimum period of two years from 1 May 2016.  The Group now has contracted affinity agreements with organisations representing more than 6 million members.

 

LFA continues to progress with the investment in facilities, technology, training and recruitment in recent years again yielding an increasing contribution to the Group's results.

 

The Group's wealth advisory division which comprises Carrwood (employed advisers working with accountancy connections) and LighthouseWealth (self-employed advisers) saw revenues grow to £4.2 million in the period to 30 June 2016 compared to £4.1 million in the corresponding period in 2015. These businesses continue to deliver highly-skilled, independent advice to the Group's higher net worth clients.

 

The Group continues to work closely with its network members to assist them in developing client relationships whilst continuing to focus on improved customer outcomes and risk minimisation. The Network remains a significant part of the group and accounted for £11.1 million of Group revenue in the first half of 2016 (2015: £11.1 million)

 

I have previously reported the launch of the Group's Lighthouse Pensions Trust ("LPT") product offering, aimed at assisting businesses with 50 or less employees ("SMEs") - the target market for the Group within this space - to meet their legal obligations to establish auto-enrolment ("AE") compliant workplace pension schemes.  A total of 1.7 million SMEs have to comply with the AE requirements and establish AE-compliant workplace pension schemes between 1 July 2016 and the end of March 2018. Although positive progress has been made in signing customers in this area the "take up" is slower than we anticipated, we do however continue to believe that significant opportunity remains, and with our focus now more on a direct rather than adviser offering we believe we are better placed to transact more business in this area. We will continue to offer these schemes through our 200 qualified self employed advisers. As at 30 June 2016 the Group had staged 100 LPT schemes comprising 1,655 active and opted-in employees, with a further 64 schemes comprising 695 employees having signed up to LPT but not yet at their staging dates.

 

Luceo Asset Management

On 16 September the Group announced the launch of Luceo Asset Management Limited ("Luceo"), a wholly-owned subsidiary which will provide proprietary investment solutions to customers that will match and continue to be matched to the customer's agreed attitude to risk. The initial Luceo Investment Funds open for business on 3 October 2016 and will be multi-manager portfolios managed by Octopus Investments Limited ("Octopus"), an award-winning fund management group, and will be available through the Lighthouse Zurich Platform under bespoke terms with unique benefits to the customer.

 

This development will enable the Group and its advisers to provide enhanced service and investment solutions to their customers and will generate enhanced and consistent recurring revenues. The Group intends to invest further in developing and expanding Luceo in due course.

 

Dividends

The Board is pleased to announce an interim dividend of 0.09 pence per ordinary share (2015: 0.08 pence) which will be payable on 25 October 2016 to shareholders on the register as at 30 September 2016. The Group's ordinary shares will go ex-dividend on 29 September 2016.

 

Brexit

The referendum held on 22 June 2016 to determine the UK's future position outside or within the European Union ("EU") caused some volatility and uncertainty within UK financial markets and inevitably resulted in lower business volumes particularly in the quarter leading up to the vote.  The result of the referendum - for the UK to leave the European Union - was largely unexpected and led to some initial market falls which, however, have since been recouped as at the date of this report.

 

The precise terms on which the UK is to exit and trade with its European partners in future have not yet been established as the UK Government has yet to serve the Article 50 notice which would trigger the two year maximum period for a withdrawal to take place and for the related terms to be agreed. The Group's customer base is largely domiciled in the UK and whilst the impending exit carries risks and uncertainties the Group is well placed to deal with any issues that might emerge in due course.

 

Regulatory developments

The FCA continues to drive regulatory change in the UK market for retail financial services.  The "pensions freedom" regime, which came into force on 6 April 2015, enables individuals to access their pension fund earlier and in greater proportions in cash than under previous legislation and has driven demand from those of the Group's clients wishing to avail themselves of the new opportunities arising.  The Group continues to work closely with such clients to ensure that any potential solutions fully take account the associated future financial implications, including any immediate tax consequences. 

 

In addition, on 14 March 2016 HM Treasury and the FCA published their final report on the Financial Advice Market Review ("FAMR") launched in August 2015.  The FAMR report, which sought to target the advice gap that was perceived to exist for those consumers with below average levels of investable assets to obtain access to financial advice at an acceptable cost, made a number of recommendations on areas where this gap could be addressed.  The recommendations, covering such areas as simplified advice and non-advised access models, the increased use of technology to deliver automated advice solutions and future funding models for the Financial Services Compensation Scheme ("FSCS"), are subject to future consideration and consultation and further guidance from the FCA is anticipated shortly. 

 

During the period under review the implementation date for the EU's Markets in Financial Instruments Directive ("MiFID II") was postponed one year and will now apply from 3 January 2018.  The Directive, which is mandatory for all EU member states, seeks to establish common standards for operating in financial markets across the EU and to address certain anomalies that currently exit between member states.  A large proportion of MiFID II's requirements, such as outlawing commission payments by providers to distributors of financial products, has already been in place in the UK for some time but is now likely to be applied to all financial products, including mortgages and certain protection products previously exempted from the commission ban introduced under the Retail Distribution Review in January 2013.  There will, however be enhanced obligations on companies operating in the financial services sector to record all discussions with customers.

 

Any future implementation of MiFID II is likely to impacted by the nature and timing of any exit by the UK from the EU following the referendum vote in June 2016. However, it is likely that the main thrust of the legislation necessary to implement the Directive will, in any event, be incorporated to the extent necessary within UK law in advance of any exit taking place.

 

Strategy and Outlook

The Group continues with its strategy of developing its own product offerings in the workplace solutions and investment product spaces and focusing on those operations within the Group which provide higher margins, whilst improving efficiency and ease of operation across the Group. We are particularly positive about the relationship with Octopus and the opportunity to grow the Luceo Asset Management proposition.

 

The Group believes that its individual business units have a positive future and that operating profits should continue to grow.  Whilst the results for the second half of the year to 31 December 2016 will not include the platform-based trail income due to regulatory change in April 2016, the Board remains confident that the Group's financial performance for the full year will be in line with market expectations.

 

Richard Last

 

Chairman

20 September 2016

 

 

 

 

 

 

 

 

 

 

 

 



 

Lighthouse Group plc

Consolidated statement of comprehensive income

for the six months ended 30 June 2016


Unaudited

6 months ended 30 June 2016

Unaudited

6 months ended 30 June 2015

Audited

Year ended 31 December 2015


£'000

£'000

£'000





Revenue

23,776

23,943

48,881

Cost of sales

(16,636)

(16,672)

(34,057)

Gross profit

7,140

7,271

14,824





Administrative expenses




Other operating expenses

(6,130)

(6,548)

(13,214)





Earnings before interest, tax, depreciation, amortisation and exceptional items

 

1,010

 

 

723

 

1,610





Total operating expenses

(6,130)

(6,548)

(13,214)

Depreciation and amortisation

(168)

(273)

(552)

Profit on disposal of property, plant and equipment

1

-

-

Total administrative expenses

(6,297)

(6,821)

(13,766)





Operating profit

843

450

1,058

Finance revenues

6

6

14

Finance costs

(20)

(97)

(206)

Profit before taxation

829

359

866

Tax charge

-

-

-

Profit for the period

829

359

866

 

Total comprehensive income for the period

 

829

 

359

 

866





Profit for the period attributable to:




Equity holders of the parent

829

359

866





Total comprehensive income for the period attributable to:




Equity holders of the parent

829

359

866





Earnings per share (basic)

0.65p

0.28p

0.68p

 

Earnings per share (diluted)

0.63p

0.28p

0.68p

 

 



 

Lighthouse Group plc

Consolidated statement of changes in equity

for the six months ended 30 June 2016


 

Share capital

Special non- distributable reserve

Reserves arising from share based payments

Retained earnings

Total attributable to equity shareholders


£'000

£'000

£'000

£'000

£'000













At 1 January 2016

1,277

1,999

1,023

2,262

6,561

 

Total recognised income and expense for the period

 

 

 

 

-

 

 

 

 

 

-

 

 

 

 

 

-

 

 

 

 

 

829

 

 

 

 

 

829

 







Dividends paid

 

-

-

-

(204)

(204)

Share-based payment

-

-

39

-

39







At 30 June 2016

1,277

1,999

1,062

2,887

7,225































At 1 January 2015

1,277

1,999

1,023

1,651

5,950

 

Total recognised income and expense for the period

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

359

 

 

 

 

359







 

Dividends paid

 

-

 

-

 

-

 

(153)

 

(153)







At 30 June 2015

1,277

1,999

1,023

1,857

6,156







 

 

 

 

Lighthouse Group plc

Consolidated statement of financial position

at 30 June 2016

 


Unaudited

30 June 2016

Unaudited

30 June 2015

Audited

31 December 2015


£'000

£'000

£'000

Assets




Non-current assets




Intangible assets

5,214

5,425

5,284

Property, plant and equipment

1,273

1,269

1,271


6,487

6,694

6,555

Current assets




Trade and other receivables

11,615

11,043

13,266

Cash and cash equivalents

7,923

8,927

8,389


19,538

19,970

21,655

Total assets

26,025

26,664

28,210

Current liabilities




Trade and other payables

(10,318)

(12,635)

(10,663)

Provisions

(2,905)

(1,866)

(6,591)


(13,223)

(14,501)

(17,254)

Non-current liabilities




Trade and other payables

(423)

(456)

(439)

Provisions

(5,154)

(5,551)

(3,956)


(5,577)

(6,007)

(4,395)

Total liabilities

(18,800)

(20,508)

(21,649)





Net assets

7,225

6,156

6,561





Capital and reserves




Called up share capital

1,277

1,277

1,277

Special non-distributable reserve

1,999

1,999

1,999

Other reserves - share-based payments

1,062

1,023

1,023

Retained earnings

2,887

1,857

2,262

Total distributable reserves

 

3,949

2,880

3,285

Total equity attributable to equity holders of the Company being total equity

 

7,225

 

6,156

 

6,561

 

The interim financial information was approved by the Board of Directors on 20 September 2016 and was signed on its behalf by

 

Malcolm Streatfield                                                                                                       

Chief Executive                                                                                                          

 

Peter Smith

Finance Director

 

 

 

 

 



 

Lighthouse Group plc

Consolidated statement of cash flows

For the six months ended 30 June 2016

 


Unaudited 6 months ended 30 June 2016

Unaudited 6 months ended 30 June 2015

Audited year ended 31 December 2015


£'000

£'000

£'000

Operating activities




Profit before tax for the period

829

359

866





Adjustments to reconcile profit for the period to net cash outflows from operating activities




Finance revenues

(6)

(6)

(14)

Finance costs

20

97

206

Depreciation of property, plant and equipment

84

75

153

Amortisation of intangible assets

84

198

399

Profit on disposal of property, plant and equipment

(1)

-

-

Share-based payments

39

-

-

Change in trade and other receivables

1,651

1,300

(923)

Change in trade and other payables

(344)

(1,051)

(1,492)

Change in provisions

(2,488)

(860)

2,270

Cash generated/(absorbed) by operations

(132)

112

1,465

Finance costs paid

(20)

(37)

(404)

Net cash inflow/(outflow) from operating activities

(152)

75

1,061





Investing activities

Purchase of property, plant and equipment

 

(86)

 

(39)

 

(119)

Purchase of intangible assets               

(14)

(9)

(69)

Proceeds from disposal of property, plant and equipment

1

-

-

Finance revenues received

6

6

14

Net cash outflow from investing activities

(93)

(42)

(174)





Financing activities




Redemption of unsecured loan notes

-

-

(1,273)

Bank loan

Dividends paid to equity shareholders

(17)

(204)

(17)

(153)

(34)

(255)

Net cash outflow from financing activities

(221)

(170)

(1,562)





Decrease in cash and cash equivalents

(466)

(137)

(675)

Cash and cash equivalents at the beginning of the period

 

8,389

 

9,064

 

9,064





Cash and cash equivalents at the end of the period

7,923

8,927

8,389





 

 

 

 

 

 

 

 

 

 

 

 

Lighthouse Group plc

Notes to the financial information

for the six months ended 30 June 2016

 

1.   The interim financial information, which comprises the consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of financial position and consolidated statement of cash flows and the related explanatory notes has been prepared on the basis of the accounting policies set out in the Group accounts for the year ended 31 December 2015. It is unaudited but has been reviewed by the auditor.

 

This information does not constitute statutory accounts for the purpose of section 435 of the Companies Act 2006.  A copy of the statutory accounts for the year ended 31 December 2015, prepared under International Financial Reporting Standards, as adopted for use in the European Union, has been delivered to the Registrar of Companies and contained an unqualified auditors' report.

 

2.   The calculation of the basic and diluted earnings per share attributable to equity shareholders of the parent company is based on the following data:

 


Unaudited

6 months ended 30 June 2016

Unaudited

6 months ended 30 June 2015

Audited

Year ended 31 December 2015





 

Earnings for the purposes of basic and dilutive earnings per share (£'000)

 

 

 

829

 

 

 

 

359

 

 

 

866

 

Weighted average number of ordinary shares for the purpose of basic earnings per share

 

 

 

127,700,298

 

 

 

 

127,700,298

 

 

 

127,700,298

 

Effect of the dilutive potential on ordinary shares: Share options

 

 

2,911,021

 

 

-

 

 

368,219

 

Weighted average number of ordinary shares for the purpose of diluted earnings per share

 

 

 

130,611,319

 

 

 

 

127,700,298

 

 

 

128,068,517

 

As at 30 June 2016, there were 660,594 (30 June 2015: 4,437,893; 31 December 2015: 1,075,166) options that existed which could potentially dilute basic earnings per share in the future, but were regarded as being anti-dilutive and therefore were not included in the calculation of dilutive shares, as their exercise price was higher than the average mid-market price of the Company's ordinary shares during the period.

 

3    A copy of the Interim Statement is being sent to all shareholders and copies are available for collection indefinitely from the Group's Head Office (address: Lighthouse Group plc, 26 Throgmorton Street, London, EC2N 2AN) or at the Group's website (www.lighthousegroup.plc.uk).

 

 

 

 

 

 

 

INDEPENDENT REVIEW REPORT TO LIGHTHOUSE GROUP PLC

 

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly report for the six months ended 30 June 2016 which comprises the condensed consolidated statement of comprehensive income, the consolidated statement of changes in equity, the condensed consolidated statement of financial position and the consolidated statement of cash flows and the related explanatory notes. We have read the other information contained in the half-yearly report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

This report is made solely to the Company in accordance with the terms of our engagement. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report 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 for our review work, for this report, or for the conclusions we have reached.

 

Directors' responsibilities

The half-yearly report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly report in accordance with the AIM Rules.

 

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

 

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly report based on our review.

 

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly report for the six months ended 30 June 2016 is not prepared, in all material respects, in accordance with the recognition and measurement requirements of IFRSs as adopted by the EU and the AIM Rules.

 

 

Ravi Lamba

for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square

London

E14 5GL

20 September 2016


This information is provided by RNS
The company news service from the London Stock Exchange
 
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