Lighthouse Regulatory News (LGT)

27 Sep 2005 07:01

Lighthouse Group PLC27 September 2005 LIGHTHOUSE GROUP PLC ("the Company" or "Lighthouse") INTERIM RESULTS FOR 6 MONTHS ENDED 30 JUNE 2005 27 September 2005 Lighthouse Group plc, one of the UK's largest firms of Independent FinancialAdvisers, today announces interim results for the six months ended 30 June 2005. Highlights of the results are: • Maiden adjusted profit (before amortisation) £71,000 (2004: loss £992,000) resulting from increased turnover and gross profit and good cost control. Loss before tax £131,000 (2004: loss £1,440,000). • 17% increase in turnover to £15.1 million as a result of increasing turnover per adviser. • 12% reduction in costs. • Strong cash position - £2.2 million in cash and no debt. • Successful rollout of new technology platform - LighthouseXpress - leading to service improvements for advisers. • Brand rationalisation bringing the benefits of the groups' profile to all divisions. Commenting on the results, executive chairman David Hickey said: "The improving investment climate and the absence of external shocks, coupledwith media focus on the savings gap is leading to increased business volumes forfinancial advisers. "Lighthouse is utterly focused on providing the best long term businessstructure for advisers. We have put considerable effort into developing theparamount technology, backed up with excellent personal advice from experiencedsupport staff. "I believe the emerging profitability of the group, together with a robustbalance sheet with cash and no debt, will make us a natural home for the bestadvisers. The Board looks forward to reporting further progress for the fullyear." ENDSFor further information: LIGHTHOUSEGROUP PLC Tel: 020 7065 5640David Hickey, Executive ChairmanMalcolm Streatfield, Chief Executive Waughton Tel: 020 7796 9999Robin Hepburn NOTES TO EDITORS:Lighthouse Group plc provides support to Independent Financial Advisers who inturn provide financial planning advice to both private and corporate clients. Lighthouse is the 6th largest IFA group in the UK (according to Life &Investment Insider, June 2005) and provides services to over 500 IFAs nationallythroughout the UK. The following are attached:Chairman's statement; Consolidated Profit & Loss Account; Consolidated BalanceSheet;Consolidated Cash Flow Statement; Notes to the Accounts. CHAIRMAN'S STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2005 Introduction I am pleased to report another period of significant progress for LighthouseGroup plc ("Lighthouse") or ("the Group"). The first six months of 2005 has seenthe Group building on the success of 2004, with continued improvements inturnover, gross profit and operating expenses. The consequence of theseimprovements is that the Group has made a profit before goodwill amortisation,for the first time, and whilst not yet a significant number, it is nonetheless asignificant breakthrough. In addition, at the EBITDA* level, the Group has nowmade a modest profit every month since June 2004. Trading Highlights 6 months to 30 6 months to 30 June 2005 June 2004 Turnover £15.1 million £12.9 millionGross Profit £3.8 million £3.3 millionOperating Costs £3.7 million £4.2 millionEBITDA * £103,000 £(950,000)Adjusted Profit/(loss)** £71,000 £(992,000)Exceptional Items Nil £(246,000)Loss before Taxation £(131,000) £(1,440,000) *Earnings before interest, tax, depreciation, amortisation and exceptionalitems.** Group result before amortisation of goodwill and exceptional items. Results Turnover for the six months to 30 June 2005 increased by 17 per cent to £15.1million (2004: £12.9 million). The bulk of this increase was due to a noticeableimprovement in turnover per adviser to an annualised figure of approximately£59,000 (2004: £50,000). In addition, there was a 55 per cent increase inmortgage business now being written through the Group by its advisers, followingthe regulatory changes in the final quarter of last year. The increase inturnover per adviser is particularly gratifying and is largely due to theGroup's strategy of focusing its resources on those advisers capable ofimproving their volumes and quality of business. Gross profit increased by 17 per cent to £3.8 million (2004: £3.3 million).Approximately half of this increase was due to volume growth with the balancecoming from improved terms of trade with product providers and advisers.Cost control remains a focus of the Group and it is pleasing to see thatoperating expenses fell by 12 per cent in absolute terms and to 25 per cent oftotal turnover, from 33 per cent in 2004. The Board believes that the currentlevel of fixed costs is unlikely to increase significantly in the foreseeablefuture. There were no exceptional items during the period (2004: £246,000). At the EBITDA level (earnings before interest, tax, depreciation, amortisationand exceptionals) the Group made a profit of £103,000 compared to a loss of£950,000 in 2004. This very significant turn-round is due to the continued focusby the Group on the better performing advisers, as well as on continued tightcost control. The loss before taxation was £131,000 (2004: £1,440,000). The Group hassignificant tax losses brought forward and does not expect to pay tax in theforeseeable future. Cash balances rose to £2.2 million (2004: £1.7 million) at the period end as aconsequence of careful working capital management and the commencement of modestbut regular cash profits in the 14 months since June 2004. The Group continuesto have no debt. Electronic Trading Xpress is the Group's electronic trading platform which is being designed tounderpin all aspects of the Group's trading. When fully operational, it isexpected to lead to service improvements for advisers' clients, significant timeeconomies for the Group's advisers, and swifter and more accurate businessprocessing for the Group. The Xpress project continues to operate within planned timescales and financialbudgets and is being handled in two phases. The roll-out of Xpress to theGroup's advisers commenced in January 2005 and should be complete by the end ofthis year. As a consequence the Group is starting to see a noticeable pick-up involumes of business being submitted electronically, albeit from a low base. Thesecond phase is the extension of Xpress into the Group's compliance, commissionpaying, and accounts functions. While this part of the project has alreadycommenced, it is anticipated to require all of 2006 at least before being fullyand reliably operational. Branding During the period the Group announced a rationalisation of the various brandsattached to its divisions. With effect from 1 November 2005, •LighthouseTemple will be the new name for the Group's largest national division. •LighthouseWealth will be the name for the wealth management national group currently being aggressively expanded •LighthouseXpress will be the name for the network (formerly Berkeley Woodhouse Associates) •LighthouseCorporate will describe the Group's corporate joint venture. This exercise is designed to bring the benefit of the Group's profile to alldivisions, and to simplify the supporting administrative operations. I ampleased to report that the response from the Group's advisers, employees andtrading partners has been uniformly positive. Strategy and ProspectsMost of the regulatory changes recently imposed on the sector have now been inforce for some months, and careful planning by the Lighthouse staff team, aswell as support from its advisers, have together resulted in a consistentlysmooth transition throughout the Group during this period. In addition, otherexternal shocks, for which the personal financial services sector was becomingnotorious, have diminished in number and scale. Accordingly there are some signsthat the structural background to the sector is starting to stabilise. I said in a previous statement that the trading background was also becomingmore benign as a consequence of a more stable investment climate and a reductionin the focus by savers on residential property. The increase in turnoverrecorded in these results appears to confirm that trend. In addition theconstant media focus on the UK personal savings gap appears to be graduallyshifting individuals' focus away from their previous experiences and towardsserious consideration of providing for their financial future. This focus isunlikely to diminish in the short to medium term and hence is expected to resultin greater business volumes for financial advisers.Finally, in my statement last year I said that the Group had come to the end ofits early stage cash outflow period. These results have evidenced thatstatement. The Board is now focused on ensuring that the Group createssignificant profits in future periods. In the meantime, and since June, theGroup has continued to trade in line with the Board's expectations andaccordingly the Board looks forward to reporting further progress for the fullyear. David HickeyExecutive Chairman 26th September 2005 LIGHTHOUSE GROUP PLC--------------------- ---------- ---------- ----------Consolidated Profit and Loss Unaudited 6 Unaudited 6 Audited YearAccount months ended 30 months ended 30 ended June 2005 June 2004 £'000 £'000 31 Dec 2004 £'000--------------------- ---------- ---------- ----------Turnover -continuing operations 15,062 12,925 26,476Less share of turnover ofjoint venture - (12) (12) ---------- ---------- ----------Total turnover 15,062 12,913 26,464Cost of sales (11,229) (9,640) (19,532)--------------------- ---------- ---------- ----------Gross profit 3,833 3,273 6,932--------------------- ---------- ---------- ----------Administrative expenses-------------------------Other operating expenses (3,730) (4,223) (7,729)Exceptional operatingexpenses - (246) (526)Depreciation andamortisation of goodwill (270) (279) (544)--------------------- ---------- ---------- ----------Total administrativeexpenses (4,000) (4,748) (8,799)--------------------- ---------- ---------- ----------Group operating loss (167) (1,475) (1,867)--------------------- ---------- ---------- ----------Share of operatingprofit in joint venture - 7 7 ---------- ---------- ----------Total operating loss: group and share of joint venture (167) (1,468) (1,860)Net interest receivable 36 28 50--------------------- ---------- ---------- ----------Loss on ordinary activitiesbefore taxation (131) (1,440) (1,810)Tax on loss on ordinary - - -activities --------------------- ---------- ---------- ----------Loss for the period (131) (1,440) (1,810)--------------------- ---------- ---------- ---------- Basic loss per share (0.42)p (4.93)p (4.74)p--------------------- ---------- ---------- ----------Diluted loss per share (0.42)p (4.93)p (4.74)p--------------------- ---------- ---------- ---------- There are no other recognised gains or losses other than the loss for theperiod. LIGHTHOUSE GROUP PLC------------------------ --------- --------- --------- Unaudited Unaudited AuditedConsolidated Balance Sheet 30 June 2005 30 June 2004 31 Dec 2004 £'000 £'000 £'000------------------------ --------- --------- ---------Fixed assetsIntangible assets 2,923 3,329 3,126Tangible assets 375 432 405Interest in joint venture:------------------------ --------- --------- ---------Share of gross assets 6 27 27Share of gross liabilities - (21) (21)------------------------ --------- --------- --------- 6 6 6------------------------ --------- --------- --------- 3,304 3,767 3,537------------------------ --------- --------- ---------Current assetsDebtors (including £nil due afterone year (December 2004 £nil, June2004 £239,000)) 3,459 4,223 4,175Cash at bank and in hand 2,162 1,721 2,506------------------------ --------- --------- --------- 5,621 5,944 6,681------------------------ --------- --------- ---------Creditors: amounts falling duewithin one year (3,245) (3,574) (3,809)------------------------ --------- --------- ---------Net current assets 2,376 2,370 2,872------------------------ --------- --------- ---------Total assets less currentliabilities 5,680 6,137 6,409Provisions for liabilities andcharges (2,310) (2,659) (2,912)------------------------ --------- --------- ---------Net assets 3,370 3,478 3,497------------------------ --------- --------- --------- Capital and reservesCalled up share capital 398 373 394Share premium account 11,132 10,763 11,132Merger reserve 2,003 2,003 2,003Other reserves 377 378 377Profit and loss account (10,540) (10,039) (10,409)------------------------ --------- --------- ---------Equity shareholders' funds 3,370 3,478 3,497------------------------ --------- --------- --------- The interim financial information was approved by the Board of Directors on 26September 2005 and was signed on its behalf by Malcolm Streatfield Paivi GriggChief Executive Finance Director LIGHTHOUSE GROUP PLC------------------------ --------- --------- -------- Unaudited 6 Unaudited 6 Audited Year months ended 30 months ended 30 ended June 2005 June 2004Consolidated Cash Flow Statement £'000 £'000 31 Dec 2004 £'000------------------------ --------- --------- --------Net cash outflows fromoperating activities (347) (807) (592)------------------------ --------- --------- --------Returns on investments andservicing of financeInterest received 36 32 60Interest paid - (1) (9)Finance lease interest paid - (3) (1)------------------------ --------- --------- --------Net cash inflow from returns oninvestments and servicingof finance 36 28 50------------------------ --------- --------- --------Capital expenditurePayments to acquiretangible fixed assets (37) (162) (197)------------------------ --------- --------- --------Net cash outflow forcapital expenditure (37) (162) (197)------------------------ --------- --------- --------Acquisitions and disposalsReceipts of deferredconsideration - - 195------------------------ --------- --------- --------Net cash inflow fromacquisitions and disposals - - 195------------------------ --------- --------- --------Net cash outflow beforefinancing (348) (941) (544)------------------------ --------- --------- --------FinancingCapital element of finance lease payments - (37) (37)Issue of ordinary sharecapital 4 - 401Expenses of issue of sharecapital - - (12)------------------------ --------- --------- --------Net cash inflow/(outflow)from financing 4 (37) 352------------------------ --------- --------- --------Decrease in cash (344) (978) (192)------------------------ --------- --------- -------- LIGHTHOUSE GROUP PLC Reconciliation of Operating Loss to Net Cash Flow from Operating Activities-------------------- ---------- ---------- ----------- Unaudited 6 Unaudited 6 Audited year months ended months ended ended 30 June 2005 30 June 2004 31 Dec 2004 £'000 £'000 £'000-------------------- ---------- ---------- ----------- Operating Loss (167) (1,475) (1,867)Depreciation 68 77 139Amortisation of goodwill 202 202 405Decrease in debtors 716 493 131Fair value of share optionsgranted - 22 22(Decrease)/increase inprovision for liabilitiesand charges (602) 322 574(Decrease)/increase increditors (564) (448) 4-------------------- ---------- ---------- -----------Net cash outflow fromoperating activities (347) (807) (592)-------------------- ---------- ---------- ----------- Reconciliation of Movement in Net Cash -------------------- ---------- ---------- ----------- 1 January 2005 Cash flow As at 30 June 2005 £'000 £'000 £'000-------------------- ---------- ---------- ----------- Cash in hand and at bank 2,506 (344) 2,162-------------------- ---------- ---------- ----------- Reconciliation of Movements in Group Shareholders' Funds ------------------------ --------- --------- -------- Unaudited 6 Unaudited 6 Audited Year months ended months ended ended 30 June 2005 30 June 2004 31 Dec 2004 £'000 £'000 £'000------------------------ --------- --------- -------- Loss for the financialperiod (131) (1,440) (1,810)Issue of ordinary sharecapital 4 - 401Expenses of issue of sharecapital - - (12)Reserve arising on thegrant of share options - 22 22------------------------ --------- --------- --------Net decrease inshareholders' funds (127) (1,418) (1,399)Opening shareholders'funds 3,497 4,896 4,896------------------------ --------- --------- --------Closing shareholders'funds 3,370 3,478 3,497------------------------ --------- --------- -------- LIGHTHOUSE GROUP PLC NOTES TO THE FINANCIAL INFORMATION The interim financial information has been prepared on the basis of theaccounting policies set out in the Group accounts for the year ended 31 December2004; it is unaudited but has been reviewed by the auditor. This informationdoes not constitute statutory accounts for the purpose of section 240 CompaniesAct 1985. The figures for the year ended 31 December 2004 have been extractedfrom the Group accounts for that period. Those financial statements have beendelivered to the Registrar of Companies and included an auditors' report, whichwas unqualified. Basic loss per share has been calculated based on the loss on ordinaryactivities after taxation and the number of shares in issue for the period ofsix months to 30 June 2005, as adjusted for the shares held in the advisers' andemployees' remuneration trusts. There is no dilution of the earnings per sharedue to the losses incurred. A copy of the Interim Statement is being sent to all shareholders and copies areavailable for collection indefinitely from the Company's Head Office at theaddress below: Lighthouse Group plc26 Throgmorton StreetLondonEC2N 2ANTelephone: 020 7065 5640Fax: 020 7776 8896www.lighthouseifa.com This information is provided by RNS The company news service from the London Stock Exchange