14 Sep 2015 07:00
Press Release | 14 September 2015 |
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 2015.
Highlights
• | Revenues increased by 2.5 per cent. to £23.9 million from £23.4 million; |
• | Gross margins increased to 30 per cent. from 29 per cent.; |
• | EBITDA* increased by £287,000 or 66 per cent. to £723,000 from £436,000; |
• | Pre-tax profits increased by £271,000 or 308 per cent. to £359,000 from £88,000; |
• | Basic earnings per share increased by 308 per cent. to 0.28 pence per share from 0.07 pence per share; |
• | Net cash balances increased by £1.1 million or 19 per cent. to £6.9 million from £5.8 million; |
• | Interim dividend increased by 33 per cent. to 0.08 pence per share from 0.06 pence per share; and |
• | New affinity contract secured with ATL and renewals and extensions secured with ASCL, BWAFU, BA Clubs and RCN. |
The comparative figures stated above are for the six months ended 30 June 2014.
*Earnings Before Interest, Tax, Depreciation, and Amortisation
Commenting on the results, Richard Last, Chairman of Lighthouse Group plc, said:
"The Board is pleased to report a strong set of results for the six months ended 30 June 2015. Average revenues per adviser have increased further which, together with higher gross margins, has driven a 66 per cent. increase in EBITDA to £723,000 and delivered a pre-tax profit of £359,000. The Group is well placed to meet its market estimate for the full year, notwithstanding recent market fluctuations, and an interim dividend of 0.08 pence per share, a one-third increase on the level in 2014, will be paid on 23 October 2015. With a strong balance sheet and net cash reserves of £6.9 million the Group is well placed to take advantage of the opportunities available to it, particularly in the auto-enrolment and workplace solutions space, whilst dealing with increased regulatory costs and an uncertain general economic outlook."
For further information, please contact:
Lighthouse Group plc |
|
Richard Last, Chairman rlast@lynxplc.com | Tel: +44 (0) 20 7065 5640 |
Malcolm Streatfield, Chief Executive | Tel: +44 (0) 20 7065 5640 |
malcolm.streatfield@lighthousegroup.plc.uk |
|
Peter Smith, Finance Director | Tel: +44 (0) 13 9245 7850 |
peter.smith@lighthousegroup.plc.uk |
|
| www.lighthousegroup.plc.uk |
finnCap |
Tel: +44 (0) 20 7220 0575 |
(Nominated Adviser to the Company) |
|
Matt Goode |
|
Emily Watts |
|
Media enquiries:
Abchurch Communications Limited |
|
Jamie Hooper / Alex Shaw | Tel: +44 (0) 20 7398 7719 |
jamie.hooper@abchurch-group.com | www.abchurch-group.com |
Chairman's statement for the six months ended 30 June 2015
Trading highlights
| Unaudited | Unaudited |
| 6 months to 30 June 2015 | 6 months to 30 June 2014 |
|
|
|
Revenue | £23.94 million | £23.36 million |
Gross profit | £7.27 million | £6.86 million |
Operating costs | £6.55 million | £6.42 million |
EBITDA * | £723,000 | £436,000 |
Profit before taxation | £359,000 | £88,000 |
Earnings per share (basic) | 0.28p | 0.07p
|
* Earnings Before Interest, Tax, Depreciation and Amortisation.
Financial performance
I am pleased to report further progress in the first six months of 2015. Group revenues grew by 2.5 per cent. in comparison with the same period in 2014 and average annualised revenue production per adviser increased by 10 per cent. to £91,000 in comparison with £83,000 in the first half of 2014.
This reflects the Group's continuing focus on providing effective advice to clients during a period of continuing change, as evidenced by the new pension freedom opportunities afforded to individuals from 6 April 2015.
Recurring revenues in the period increased to £11 million from £10 million in the comparative period and remained at some 48 per cent. of total Group revenues (excluding adviser charges).
Gross margin percentage increased to 30 per cent. (£7.3 million) from 29 per cent. (£6.9 million) in 2014, reflecting the increasing contribution to revenues achieved by the Group's own value-added businesses, Lighthouse Financial Advice ("LFA") and LighthouseCarrwood ("Carrwood").
Operating costs increased by £0.13 million to £6.55 million in comparison with 2014, primarily as a result of increases in regulatory fees and professional indemnity insurance costs.
EBITDA for the period amounted to £723,000, an increase of £287,000 or 66 per cent. from the £436,000 recorded in the comparative period in 2014 as a result of the increased gross margin offset by the small increase in operating costs. After deduction of depreciation, amortisation and net finance costs, the Group recorded a profit before and after taxation of £359,000 (2014: £88,000), with earnings per ordinary share of 0.28 pence (2014: 0.07 pence).
Financial position and cash flow
The Group continues to maintain a strong balance sheet with net cash reserves amounting to £6.9 million at 30 June 2015 (30 June 2014: £5.8 million, 31 December 2014: £7 million). The net cash balance is stated after deduction of unsecured loan notes and property mortgage of £1.5 million and £0.5 million respectively. The unsecured loan notes are scheduled for redemption on 31 December 2015.
The increase in net cash from 30 June 2014 is as a result of the operational cash flow generated since that date. The small reduction since 1 January 2015 is as a result of the payment of the final dividend for 2014 of £153,000 in May 2015 and up-front payment of professional indemnity insurance recoverable over future periods offset by the profit recorded for the period.
Business relationships and developments
Affinity relationships continue to be an important component of the Group's operations, particularly in the national LFA division, and gross revenues derived from such sources increased to £2.9 million in the six months to 30 June 2015 in comparison with £2.2 million in the first half of 2014, representing 12.1 per cent. of Group revenues in the half year compared with only 9.4 per cent. in the comparative period in 2014.
The Group continues to secure new affinity relationships as well as renewals of existing arrangements with a new contract being secured to provide financial advice to the members of the Association of Teachers and Leaders for a minimum period of two years from 27 August 2015 and existing contracts with the Association of School and College Leaders, the Bakers, Foods and Allied Workers Union and British Airways Clubs being renewed for a further three years and the contract with the Royal College of Nursing being extended for an additional twelve months until the end of 2016.
LFA continues to progress with the investment in facilities, technology, training and recruitment in recent years yielding an increasing contribution to the Group's results.
The Group's wealth advisory businesses - comprising Carrwood (employed advisers working with accountancy connections) and LighthouseWealth (self-employed advisers working primarily in the South East of England) - continues 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 risk minimisation.
As indicated in previous reports, the Group is now entering the phase of auto-enrolment ("AE") where businesses with 50 or less employees ("SMEs") - the target market for the Group's Lighthouse Pensions Trust ("LPT") product offering within this space - will have to commence the establishment of AE-compliant schemes. Whilst some 45,000 such businesses are required to do so by 31 December 2015, that number increases to in excess of 500,000 and 600,000 SMEs having to comply with the AE requirements and establish schemes in the calendar years 2016 and 2017 respectively, with a total of 1.8 million SMEs having to do so between 1 July 2015 and the end of 2018.
The Group has 210 advisers fully trained and ready to assist such companies to meet their AE obligations, providing a one-stop shop for SMEs in an area where personal advice to such firms is in short supply. This includes 29 advisers, principally within LFA, who have been designated as LPT champions to the whole of the Group's advisory and SME target communities.
Relationships with payroll and accountancy organisations have been established and the Group is working closely with a number of other commercial groups to address the needs of the SME population. As at 31 July 2015 the Group has staged 37 LPT schemes comprising 979 active and opted-in employees, with a further 18 schemes comprising 268 employees having signed up to LP but not yet at their staging dates, ahead of the target SME population having to start meeting their auto-enrolment obligations from July 2015.
In June 2015 the Group announced the launch of the Lighthouse Life Trust ("LLT"), a complementary unbundled master trust product offering which offers those SMEs that have signed up to the LPT the opportunity to offer death-in-cover to its employees without the need for medical underwriting. The LLT is underwritten by Zurich Insurance Group.
Both the LPT and LLT form part of the newly branded Lighthouse Workplace Solutions service which seeks to provide SMEs with an increasingly wide range of products, enabling them to meet legal obligations and aiding them in increasing staff retention and satisfaction.
Dividends
The Board is pleased to announce an interim dividend of 0.08 pence per ordinary share (2014: 0.06 pence) which will be payable on 23 October 2015 to shareholders on the register as at 25 September 2015.
Regulatory developments
Regulatory change in the UK market for retail financial services within which the Group operates continues with the "pensions freedom" regime, under which individuals can access their pension fund earlier and in greater proportions in cash than under previous legislation, announced in the 2014 Budget, having come into force on 6 April 2015. The Group has experienced considerable demand from clients wishing to take advantage of the new opportunities open to them and is working closely with such clients in order to ensure that any such decisions are made having regard to their full impact on future financial requirements, including any immediate tax implications.
Lighthouse is part of the FCA's Project Innovate arrangements whereby alternatives to traditional channels for advice to consumers with relatively low levels of investable funds are being explored. The pilot scheme established in the first quarter of 2015 to test the market for direct on-line advice using a white-labelled version of the Money on Toast software has been extended in order to cover a complete annual investment cycle and also to include additional affinity relationships through Parliament Hill. The results of the pilot will be assessed in due course.
The Group has also had to cope with significant increases in regulatory costs, especially in relation to the funding of the Financial Services Compensation Scheme, where the burden of increased levies has fallen on the distribution sector. The latest bill, for the year ending 31 March 2016, represented an increase in previous costs of £442,000 or 54 per cent. and will, in part, inevitably have to be passed onto customers. The Group is currently examining the proposal by the Financial Conduct Authority ("FCA") to move from a cost-based to a revenue-based approach for calculating a regulated firm's minimum regulatory capital requirement.
Strategy and Outlook
The Group is continuing with its strategy of developing its own product offerings and focusing on those operations within the Group which provide higher margins, whilst improving efficiency and ease of operation across the Group.
The results for the six months to 30 June 2015 indicate the progress being made and the Board considers the Group to be well placed to take advantage of the opportunities available to it and to be on schedule to meet market expectations for 2015 notwithstanding recent market uncertainties.
Richard Last
Chairman
11 September 2015
Lighthouse Group plc
Consolidated statement of comprehensive income
for the six months ended 30 June 2015
| Unaudited 6 months ended 30 June 2015 | Unaudited 6 months ended 30 June 2014 | Audited Year ended 31 December 2014 |
| £'000 | £'000 | £'000 |
|
|
|
|
Revenue | 23,943 | 23,363 | 46,798 |
Cost of sales | (16,672) | (16,505) | (33,447) |
Gross profit | 7,271 | 6,858 | 13.351 |
|
|
|
|
Administrative expenses |
|
|
|
Other operating expenses | (6,548) | (6,422) | (12,149) |
|
|
|
|
Earnings before interest, tax, depreciation, amortisation and exceptional items |
723
|
436 |
1,202 |
|
|
|
|
Non-recurring operating expenses | - | - | - |
Total operating expenses | (6,548) | (6,422) | (12,149) |
Depreciation and amortisation | (273) | (268) | (538) |
Total administrative expenses | (6,821) | (6,690) | (12,687) |
|
|
|
|
Operating profit | 450 | 168 | 664 |
Finance revenues | 6 | 10 | 70 |
Finance costs | (97) | (90) | (177) |
Profit before taxation | 359 | 88 | 557 |
Tax charge | - | - | - |
Profit for the period | 359 | 88 | 557 |
Other comprehensive income: |
|
|
|
Increase in fair value of available-for-sale financial asset |
-
|
4 |
(134) |
Total comprehensive income for the period |
359 |
92 |
423 |
|
|
|
|
Profit for the period attributable to: |
|
|
|
Equity holders of the parent | 359 | 88 | 557 |
|
|
|
|
Total comprehensive income for the period attributable to: |
|
|
|
Equity holders of the parent | 359 | 92 | 423 |
|
|
|
|
Earnings per share (basic) | 0.28p | 0.07p | 0.44p |
There was no material difference between basic and fully diluted earnings per share in any of the above periods.
Lighthouse Group plc
Consolidated statement of changes in equity
for the six months ended 30 June 2015
|
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 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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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At 1 January 2014 | 1,277 | 1,999 | 1,023 | 1,304 | 5,603 |
Total recognised income and expense for the period |
- |
- |
- |
88 |
88 |
Increase in fair value of available for sale financial asset |
- |
- |
- |
4 |
4 |
Share-based payment |
- |
- |
18 |
- |
18 |
|
|
|
|
|
|
At 30 June 2014 | 1,277 | 1,999 | 1,041 | 1,396 | 5,713 |
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Lighthouse Group plc
Consolidated statement of financial position
at 30 June 2015
| Unaudited 30 June 2015 | Unaudited 30 June 2014 | Audited 31 December 2014 |
| £'000 | £'000 | £'000 |
Assets |
|
|
|
Non-current assets |
|
|
|
Intangible assets | 5,425 | 5,768 | 5,614 |
Property, plant and equipment | 1,269 | 1,358 | 1,305 |
Available-for-sale Investments | - | 165 | - |
| 6,694 | 7,291 | 6,919 |
Current assets |
|
|
|
Trade and other receivables | 11,043 | 12,769 | 12,343 |
Cash and cash equivalents | 8,927 | 7,724 | 9,064 |
| 19,970 | 20,493 | 21,407 |
Total assets | 26,664 | 27,784 | 28,326 |
Current liabilities |
|
|
|
Trade and other payables | (12,635) | (10,284) | (13,626) |
Provisions | (1,866) | (5,138) | (3,493) |
| (14,501) | (15,422) | (17,119) |
Non-current liabilities |
|
|
|
Trade and other payables | (456) | (1,918) | (473) |
Provisions | (5,551) | (4,731) | (4,784) |
| (6,007) | (6,649) | (5,257) |
Total liabilities | (20,508) | (22,071) | (22,376) |
|
|
|
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Net assets | 6,156 | 5,713 | 5,950 |
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Capital and reserves |
|
|
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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 | 1,023 | 1,041 | 1,023 |
Retained earnings | 1,857 | 1,396 | 1,651 |
Total distributable reserves
| 2,880 | 2,437 | 2,674 |
Total equity attributable to equity holders of the Company being total equity |
6,156 |
5,713 |
5,950 |
The interim financial information was approved by the Board of Directors on 11 September 2015 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 2015
| Unaudited 6 months ended 30 June 2015 | Unaudited 6 months ended 30 June 2014 | Audited year ended 31 December 2014 |
| £'000 | £'000 | £'000 |
Operating activities |
|
|
|
Profit before tax for the period | 359 | 88 | 557 |
|
|
|
|
Adjustments to reconcile profit for the period to net cash outflows from operating activities |
|
|
|
Finance revenues | (6) | (10) | (70) |
Finance costs | 97 | 90 | 177 |
Depreciation of property, plant and equipment | 75 | 77 | 155 |
Amortisation of intangible assets | 198 | 191 | 383 |
Share based payments | - | 18 | - |
Change in trade and other receivables | 1,300 | (445) | (19) |
Change in trade and other payables | (1,051) | (893) | 944 |
Change in provisions | (860) | (809) | (2,401) |
|
|
|
|
Cash generated/(absorbed) by operations | 112 | (1,693) | (274) |
Finance costs paid | (37) | (30) | (57) |
Net cash inflow/(outflow) from operating activities | 75 | (1,723) | (331) |
|
|
|
|
Investing activities Disposal of available-for-sale financial asset |
- |
- |
171 |
Disposal of subsidiary undertaking | - | - | (91) |
Disposal of property, plant and equipment | - | - | 2 |
Purchase of property, plant and equipment | (39) | (72) | (97) |
Purchase of intangible assets | (9) | - | (38) |
Finance revenues received | 6 | 10 | 17 |
Net cash outflow from investing activities | (42) | (60) | (36) |
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Financing activities |
|
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Bank loan Dividends paid to equity shareholders | (17) (153) | - - | - (76) |
Net cash outflow from financing activities | (170) | - | (76) |
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Decrease in cash and cash equivalents | (137) | (1,783) | (443) |
Cash and cash equivalents at the beginning of the period |
9,064 |
9,507 |
9,507 |
|
|
|
|
Cash and cash equivalents at the end of the period | 8,927 | 7,724 | 9,064 |
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Lighthouse Group plc
Notes to the financial information
for the six months ended 30 June 2015
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 2014. 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 2014, prepared under International Financial Reporting Standards 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 2015 | Unaudited 6 months ended 30 June 2014 | Audited Year ended 31 December 2014 |
|
|
|
|
Earnings for the purposes of basic and dilutive earnings per share (£'000) |
359
|
88 |
557 |
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 |
-
|
281,006 |
- |
Weighted average number of ordinary shares for the purpose of diluted earnings per share |
127,700,298
|
127,981,304 |
127,700,298 |
As at 30 June 2015, there were 4,437,893 (30 June 2014: 4,707,364; 31 December 2014: 4,645,676) 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 2015 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 the recognition and measurement requirements of IFRSs 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 2015 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 LLPChartered Accountants15 Canada Square
London
E14 5GL
11 September 2015