TIDMLGT
RNS Number : 0729R
Lighthouse Group PLC
26 February 2019
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014
Press Release 26 February 2019
Lighthouse Group plc
("Lighthouse", the "Group" or the "Company")
Final results for the year ended 31 December 2018
Lighthouse Group plc (AIM: LGT), the national financial advisory
group, today announces its final audited results for the year ended
31 December 2018.
Financial Highlights
-- Underlying EBITDA* up 7 per cent. to GBP3.42 million (2017:
GBP3.19 million);
-- Profit before tax up 5 per cent. to GBP2.64 million (2017:
GBP2.52 million)
-- Revenues GBP53.42 million (2017: GBP54.11 million);
-- Average annualised revenue production per adviser maintained
at record level of GBP122,000 from 2017;
-- Recurring revenues generated from clients up 10 per cent.
to GBP26.77 million (2017: GBP24.39 million);
-- Interim dividend of 0.20 pence per share (2017: 0.12 pence
per share) paid and final dividend of 0.50 pence per share
proposed (2017: 0.30 pence per share) - a year on year increase
for the full year of 67 per cent.;
-- Cash balances up GBP0.8 million or 8 per cent. to GBP9.55
million (2017: GBP8.73 million) after investment in Tavistock
Investments plc of GBP1 million and dividend payments of
GBP0.64 million (2017: GBP0.38 million);
-- Operating cash flow generation GBP2.87 million after investment
of GBP0.55 million in customer solution development (2017:
GBP1.38 million after GBP0.84 million investment expensed).
Operational Highlights
-- 23 affinity contracts now in place (2017: 21) with 2 new
wins and 10 other contracts renewed;
-- Strategic agreement with and investment of GBP1 million
for 5.3 per cent. stake in Tavistock Investments plc as
part of long-term relationship.
Post year end events
-- Completion of the strategic review of the Lighthouse Pensions
Trust resulting in an exit from that business via a proposed
transfer to Smart Pension Limited.
* Earnings before interest, tax, depreciation and amortisation
and non-cash share-based payment charge.
Commenting on the results, Richard Last, Chairman of Lighthouse
Group plc, said: "Lighthouse has continued to progress its strategy
in 2018 despite softening market conditions in the second half of
the year and has delivered an excellent set of results alongside a
number of strategic initiatives. The substantial rise in recurring
revenues together with maintenance of the record average annualised
revenue per adviser, along with a reduction in operating costs
flowing from the Group's continuing focus on providing good
customer outcomes, resulted in a further increase in earnings.
Lighthouse remain well positioned to deliver further growth
notwithstanding current market uncertainty."
For further information, please contact:
Lighthouse Group plc
Richard Last, Chairman Tel: +44 (0) 20 7065 5640
Malcolm Streatfield, Chief investorenquiries@lighthousefs.co.uk
Executive
Peter Smith, Finance Director www.lighthousegroup.plc.uk
finnCap Limited Tel: +44 (0) 20 7220 0500
(Nominated Adviser and Broker
to the Company)
Corporate Finance
Julian Blunt / Emily Watts
/ Hannah Boros
Corporate Broking
Alice Lane / Richard Chambers
Media enquiries: IFC Advisory Tel: +44 (0) 20 3934 6630
Heather Armstrong / Graham heather.armstrong@investor-focus.co.uk
Herring / Florence Chandler www.investor-focus.co.uk
CHAIRMAN'S STATEMENT
OVERVIEW
I am pleased to report the Group's results for the year ended 31
December 2018, which are set out below and in the Consolidated
Statement of Comprehensive Income in the Annual Report. Lighthouse
achieved a record financial performance in 2018, with underlying
EBITDA* increasing by 7 per cent. to GBP3.42 million compared to
GBP3.19 million in 2017 on revenues marginally lower (1 per cent.)
at GBP53.42 million (2017: GBP54.11 million). Profit before
taxation for the year amounted to GBP2.64 million compared to
GBP2.52 million in 2017 - an increase of 5 per cent. Adjusted basic
earnings per share (after a standard tax charge) increased by 6 per
cent. to 1.68 pence per ordinary share (2017: 1.59 pence per
ordinary share).
TRADING HIGHLIGHTS
2018 2017
Revenue GBP53.42m GBP54.11m
Gross profit GBP14.60m GBP14.67m
Operating costs GBP11.18m GBP11.48m
Underlying EBITDA* GBP3.42m GBP3.19m
Depreciation and amortisation GBP0.40m GBP0.27m
Non-cash share-based payments charge GBP0.37m GBP0.39m
Profit before taxation GBP2.64m GBP2.52m
Taxation (charge)/credit (GBP0.11m) GBP0.20m
Profit after taxation GBP2.53m GBP2.72m
Earnings per share:
Basic 1.98p 2.13p
Adjusted basic reflecting standard tax charge** 1.68p 1.59p
Fully diluted 1.82p 1.98p
Adjusted fully diluted reflecting standard
tax charge** 1.54p 1.49p
*Earnings before interest, tax, depreciation and amortisation
and non-cash share-based payments charge.
**Calculated after applying standard tax charge of 19% (2017:
19.25%) and disclosed to aid comparability of results.
FINANCIAL PERFORMANCE
Group revenue for 2018 was GBP0.69 million or 1 per cent. lower
than in 2017, due to softened demand from customers following the
correction in UK and global financial markets and a levelling out
of pension transfer advice demand in the second half of the year.
Notwithstanding this, average annualised revenue production per
adviser for the year remained at the record GBP122,000 level
achieved in 2017. Recurring revenues increased by a further 10 per
cent. to reach a new high of GBP26.77 million or 53 per cent. of
total revenue generated from customers (2017: GBP24.39 million and
48 per cent. respectively).
Gross margins in 2018 were 27.34 per cent. (2017: 27.11 per
cent.).
Operating costs reduced by GBP0.30 million or 3 per cent., from
GBP11.49 million in 2017 to GBP11.19 million in 2018.
Overall the Group continued to invest in and expense the
development of its Luceo Asset Management and auto-enrolment
propositions, with negative contributions in those divisions
reducing to GBP0.30 million and GBP0.25 million respectively (2017:
negative contributions of GBP0.31 million and GBP0.53 million
respectively).
The Group's profit before taxation increased by GBP0.12 million
or 5 per cent. to GBP2.64 million (2017: GBP2.52 million). Basic
earnings per share in 2018 amounted to 1.98 pence per ordinary
share after a deferred tax charge of GBP111,000 (2017: 2.13 pence
per ordinary share after a deferred taxation credit of GBP200,000)
and adjusted basic earnings per share, calculated after a standard
tax charge of 19 per cent. (2017: 19.25 per cent.), increased by 6
per cent. to 1.68 pence per ordinary share. (2017: 1.59 pence per
ordinary share).
AFFINITY AND OTHER BUSINESS RELATIONSHIPS
The Group is the market leader for the provision of advice to
members of affinity groups, with 23 contractual relationships at 31
December 2018 whose aggregate membership exceeds six million
individuals. Revenues derived from affinity sources in 2018 on a
like for like basis (excluding the exceptional level of pension
transfer business advice given) increased by GBP0.31 million or 3
per cent. to GBP9.74 million from the GBP9.43 million (adjusted) in
2017. It is particularly pleasing to note the increase in recurring
revenues from affinity-sourced clients, up GBP0.54 million or 12
per cent. to GBP4.89 million from GBP4.35 million in 2017,
reflecting the benefit of establishing long-term customer
relationships from initial advice given in prior periods.
Affinity-sourced business remains a highly significant
contributor to Group performance, contributing GBP2.80 million
after direct costs and further investment in the business in 2018
(2017: GBP2.92 million on a like for like basis). The Group's
dedicated mortgage business, Lighthouse Mortgage Protection
Services, is increasingly linked with and sources business from the
23 affinity relationships and in 2018 increased its revenues by 27
per cent. to GBP1.47 million from GBP1.16 million.
LUCEO ASSET MANAGEMENT
Luceo Asset Management Limited ("Luceo"), the Group's sponsored
investment solution business launched in late 2016, continued to
accumulate funds during the year, with assets under management
increasing from GBP37 million at 31 December 2017 to GBP58 million
at 31 December 2018. After a GBP22 million net increase in funds in
the first nine months of the year, the final quarter of 2018 saw a
net decrease of GBP1 million, reflecting the general uncertainty in
the financial markets and the 10 per cent. correction in UK stock
markets in that period. Notwithstanding this, the Board remains
confident that the Luceo Investment Funds, which provide the
Group's customers with access to sponsored investment solutions
matched to their agreed risk profiles with Octopus Investments as
Investment Adviser, remain ideally suited to form part of the
investment portfolio for the Group's target "Middle Britain"
customer.
TAVISTOCK INVESTMENTS PLC
In October 2018 the Group announced the launch of a strategic
relationship with Tavistock Investments plc ("Tavistock"), a fellow
AIM-quoted advisory and asset management group. In the initial
phase of that relationship, the Group is reviewing Tavistock's
range of capital protected investment solutions with a view to, if
appropriate, making them available to the Group's customers through
its Luceo Asset Management offering. Once approved, the products
would be aligned with customers' agreed risk profiles (as is the
case for the current Luceo range) and will provide the customer
with a capital underpin, backed by Morgan Stanley, of between 85
and 90 per cent. of the maximum portfolio value achieved
post-investment. Further updates will be issued in due course.
As part of the arrangement the Board agreed to subscribe for
GBP1 million of new ordinary shares that were issued by Tavistock
in October 2018, giving the Company a 5.3% stake in that
company.
STRATEGIC REVIEW OF AUTO-ENROLMENT BUSINESS
In the interim report issued on 4 September 2018, I announced
the Board was undertaking a strategic review of the Corporate
Pensions Trust ("CPT"), which incorporates the Group's Lighthouse
Pensions Trust ("LPT") auto-enrolment solution for SMEs.
On 21 January 2019 the Group announced it had completed its
strategic review and had concluded that it would not be in the best
interests of shareholders to continue to provide financial support
to the CPT to enable it to apply for Master Trust authorisation.
This decision has been communicated to the CPT Trustees.
The Group has identified the Auto-Enrolment Master Trust
("AEMT") operated by Smart Pension Limited ("Smart"), which is
part-owned by J.P. Morgan and Legal & General, as the most
appropriate candidate to assume responsibility for receiving the
assets and members within the CPT.
The Group has agreed to continue to fund the operating costs of
the CPT Trustees during the process, together with the costs of
winding-up the CPT once all transfers have been effected. It is
intended that the existing contractual arrangements between the
Group and participating employers within the LPT for the provision
of regular payroll assessment and opt-in/opt-out reviews will be
renewed but with the AEMT as the scheme provider post transfer.
The impact of the proposed transfer is expected to be broadly
cost neutral in 2019 and should provide a small net income stream
after associated costs from 2020 onwards. The transfer will enable
the Group to focus further on its affinity- and professional
connections- centred core customer base.
FINANCIAL POSITION
The Group had cash balances of GBP9.55 million as at 31 December
2018 compared to GBP8.73 million at the previous year-end, an
increase of 9 per cent. The cash balances are stated after the
investment of GBP1 million in Tavistock Investments plc shares
(2017: GBPNil) and the payment of dividends in the year totalling
GBP639,000 (2017: GBP383,000).
REGULATORY DEVELOPMENTS
Regulatory development continued during 2018, with the Markets
in Financial Instruments Directive ("MiFID II"), the General Data
Protection Regulation and the Insurance Intermediation Directive
all having come into effect during the year. The Group has revised
its processes as necessary to deal with the additional obligations
re customer information provision and security of data processing
the new regulations have imposed. The Financial Conduct Authority
("FCA") announced during 2018 the near final shape of the Senior
Managers and Certification Regime ("SMCR") and the Group is again
developing plans to ensure it will be able to comply with the SMCR
when it comes into effect in December 2019.
Compliance with regulation remains an overarching focus for the
Group.
DIVIDS
A final dividend of 0.50 pence per ordinary share (2017: 0.30
pence per ordinary share), an increase of 67 per cent., is
recommended by the Board and, subject to approval at the
forthcoming Annual General Meeting, will be payable on 10 May 2019
to shareholders on the register at close of business on 5 April
2019. The corresponding ex-dividend date is 4 April 2019. The last
day to make an election in respect of the dividend reinvestment
plan operated by Link Market Services Trustees Limited will be 19
April 2019.
This follows the interim dividend of 0.20 pence per ordinary
share (2017: 0.12 pence per ordinary share) paid in October 2018
and makes a total dividend for the year of 0.70 pence per ordinary
share (2017: 0.42 pence per ordinary share). The Group intends to
continue with a progressive dividend policy.
EMPLOYEES AND BOARD
In the Group's Interim Report on 4 September 2018, I announced
that, in the light of current guidance on Corporate Governance and
my having served as a Director of the Company since July 2007 and
as Chairman since August 2012, I had advised the Board of my
intention to stand down from the Board of the Company and not stand
for re-election as a Director at the next Annual General Meeting of
the Company in May 2019. A process to identify and secure the
services of an appropriate replacement as a Director and Chair of
the Company's Board has commenced, with headhunters having been
briefed, and further updates will be provided in due course.
I would like to express my appreciation to my Executive
directors and all of the Group's employees for their
professionalism, hard work and dedication, and to my Non-Executive
colleagues for their significant support and contribution, both
during 2018 and throughout my time as a Director and Chairman. I am
confident that the Group is in good hands to continue its
progress.
ADVISERS
The Group's advisers remain the core of what we do in delivering
appropriate investment solutions to customers based on holistic
financial advice and commensurate with their attitude to risk. I
would like to thank all of the Group's advisers for their concerted
and highly-skilled contribution to the Group and its clients during
2018.
STRATEGY AND PROSPECTS
The potential impact of Brexit, together with the corrections in
UK and global financial markets in recent months, has resulted in a
measure of uncertainty within the retail financial services market
in the UK. Increased regulation and market uncertainties inevitably
mean upward pressure on costs, in particular in the areas of
compliance, technology and professional indemnity insurance
procurement. In this latter regard in February 2019 the Group has
renewed its PII cover for a further 15 months on terms materially
in line with the previous policy, notwithstanding the recent market
tightening and the nervousness among insurers caused by the FCA's
proposal to increase the maximum amount that the Financial
Ombudsman Service can award from GBP150,000 to GBP350,000 per case
(for advice given post 1 April 2019). The renewal reflects the
insurers' positive view of the quality of advice provided by the
Group and its advisers and is a testament to the focus on
compliance and risk management on behalf of all customers.
The Group is reviewing its strategy for the next five years to
identify those areas (such as the affinity and professional
connections markets) which are most likely to produce future
earnings growth. Additional accelerated investment may be required
in adviser recruitment, lead generation and marketing to deliver
this growth. Further updates will be provided in due course.
The Group is well-placed to deal with cost pressures, with its
ever-increasing recurring revenue base and with the new annual
review obligations imposed by MiFID II giving rise to additional
customer interaction and hence new business opportunities. The
Group continues to focus on improving its operational efficiency
and delivering first-class services to its customers by developing
innovative solutions.
With an on-going focus on increasing business derived from
affinity relationships, by introducing new and enhanced financial
solutions for customers and increasing cost efficiency, the Board
believes that Lighthouse is well placed to take advantage of the
opportunities available.
Richard Last
Chairman
25 February 2019
CHIEF EXECUTIVE'S REVIEW
OVERVIEW
Lighthouse continued to progress during 2018, with the Group
delivering new records for underlying EBITDA and profit before
taxation at GBP3.42 million (2017: GBP3.19 million) and GBP2.64
million (2017: GBP2.52 million) respectively. This was against a
backdrop of increased market volatility in the last quarter with
significant public market corrections of more than 10 per cent. and
increasing uncertainty re the nature and impact of any exit by the
UK from the European Union ("Brexit"). In this context the
maintenance of the record level of average annualised revenue per
adviser in 2017 of GBP122,000 was a considerable achievement.
The Group's affinity business continues to develop, with 23
contractual arrangements in place as at 31 December 2018 (2017:
21). Total revenues from this source at GBP9.74 million were
GBP0.31 million or 3 per cent. above the 2017 level of GBP9.43
million, the latter calculated on a like for like basis adjusting
for the exceptional level of pension transfer business advised on
in 2017. The increase of GBP0.54 million or 12 per cent. in
recurring revenues generated from affinity-related customers (from
GBP4.35 million to GBP4.89 million) underlines the on-going benefit
of the Group's policy of building long-term and mutually beneficial
relationships with its customers.
Our affinity-based business remains a valuable and higher-margin
business which contributed GBP2.80 million after direct costs in
2018 (2017: GBP3.09 million), with the high demand for initial
advice on defined benefit transfers in 2017 being replaced by
on-going fees from those clients in 2018 and beyond. The Group
continues to be seen as the leading provider of holistic financial
advice to members of affinity-based organisations.
Average revenues per adviser remained at the record level of
GBP122,000 recorded in 2017. This was an excellent achievement
given the market uncertainties in the latter part of the year and
underpins the value of the Group's focus on delivering holistic
financial advice to its customers which is arguably even more
relevant in times of market disruption. Recurring revenues
increased by GBP2.38 million to reach a new high of GBP26.77
million and increased to 53 per cent. of total revenues generated
from customers in 2018 (2017: GBP24.39 million and 48 per cent.
respectively).
This underlines the increasing benefit of the Group's policy of
engaging with and providing advice to customers for the long-term
across all of the Group's operations as well as the resilience of
the Group's operating model. Such engagement will become even more
important from January 2019, when all investments advised upon
since the introduction of MiFID II on 2 January 2018 will need to
be reviewed for on-going suitability on an annual basis. Whilst
this will undoubtedly increase pressure on advisers, administrators
and costs, the obligation will generate increased opportunity for
the Group and its advisers to identify and deliver new business
advice and hence income.
Continuing careful management of the Group's operating cost base
resulted in a reduction of GBP0.30 million in administrative
overheads to GBP11.19 million (2017: GBP11.49 million).
The Group continues to invest in technology development and
initiatives to enhance existing and produce new business offerings
in order to better serve its customers, deliver operational
efficiencies and take advantage of the many opportunities that
exist.
Further details of 2018 trading are set out later in this
review.
OPERATIONS AND BUSINESS MODEL
The Group provides financial advice through its three principal
business segments, being:
Lighthouse Financial Advice ("LFA") - National
LFA is the affinity-based national advisory division servicing
the Group's 23 contractual affinity relationships. Advisers within
LFA recommend solutions primarily from the Group's Lighthouse
Researched Solutions ("LRS") range (including Luceo Asset
Management, the Group's sponsored in-house range of actively
managed investment solutions). All solutions within that range are
centrally researched and independently assessed to align with
customer risk profiles, both on initial entry to the LRS range and
on an on-going basis thereafter. The breadth of the investment
alternatives within each solution make them an ideal whole of
market offering designed to meet the needs of the Group's target
market of individuals within the mass affluent sector commonly
referred to as "Middle Britain".
LFA advisers are provided with leads generated by the Group's
affinity field team and administered by the central client services
and events operation and with diary management, marketing and
technology support. Leads are derived from field activity across
the affinity population which generates seminars and surgeries
typically held within business premises.
Until recently advisers within LFA have all been self-employed
but in 2018 the Group commenced targeting and recruiting employed
advisers so as to better service the growing demand from its
affinity connections.
The national segment also includes specialist mortgage and
protection advisers operating under the Group's Lighthouse Mortgage
and Protection Services ("LMPS") trading style. Advisers within
this specialist unit, all of whom are self-employed, provide expert
advice on mortgages and related services and are provided with
similar support as their colleagues within LFA and increasingly
source their leads from the same affinity connections. As at 31
December 2018, 17 of the Group's contractual affinity relationships
had agreed to recommend LMPS as the preferred provider of mortgage
and protection advice for their members.
Wealth Advisory
The Group's wealth advisory segment comprises advisers within
LighthouseCarrwood ("Carrwood") and LighthouseWealth
("Wealth").
The advisers within Carrwood are employed and highly qualified
and service the Group's accountancy and professional connections
(currently in excess of 50). The advisers operate within the
relevant connection as "part of the business" and provide
specialist, highly-skilled advice to clients of those connections,
often at a crucial period of their lives such as selling a
business, inheriting wealth, dealing with significant income or
capital receipts or planning pre- or post-retirement.
Given the source and relative status of the typical Carrwood
client, advisers within this division are the highest producers
across the Group. They are supported by full administration,
business processing and paraplanning services which contribute
significantly to such high levels of productivity.
The advisers within Wealth are similarly highly-skilled but
self-employed and operate from the Group's head office premises in
the City of London or from their own locations, generating and
servicing their own client bases, principally in London and the
South of England. Wealth advisers have access to the Group's
paraplanning service within Carrwood.
Communities (network)
The Communities segment comprises Lighthouse Advisory Services,
the Group's authorised network business of self-employed advisers
within appointed representative firms who operate from their own
premises and provide holistic financial advice under their own
brands to customers within their local communities. The advisers
within this segment have access to the same Fairway technology and
Lighthouse Researched Solutions product suites available elsewhere
in the Group.
Operations
At 31 December 2018 the Group employed 157 staff, including
employed advisers, and operated out of three principal locations,
being London (plc office and base for City-based advisers),
Stockport (operating base for Carrwood, including Lighthouse Group
Employee Benefits, compliance and IT support centre) and
Woodingdean, near Brighton (base for LFA operations support and
finance and adviser remuneration functions).
FINANCIAL COMMENTARY
REVENUE AND GROSS MARGINS
Total revenues in 2018 amounted to GBP53.42 million (2017:
GBP54.11 million). Average annualised revenue production per
adviser was maintained at the record level of GBP122,000 achieved
in 2017. Recurring revenues, a key barometer of the stability and
growth prospects of a business within the financial services
sector, increased by GBP2.38 million or 10 per cent. to GBP26.77
million from GBP24.39 million recorded in 2017 and was 53 per cent.
of all revenues generated from customers compared with 48 per cent.
in 2017. These improvements were generated across all of the
Group's operating businesses and underline the robustness of the
Group's business model.
Gross margins at 27.34 per cent. remained broadly similar to the
27.11 per cent. recorded in 2017.
OPERATING COSTS
Operating costs decreased by GBP0.30 million to GBP11.19 million
in 2018 from GBP11.49 million in 2017. The Group continues to
monitor closely its operating base and looks to minimise such costs
where possible.
The Group continued to invest and expense in developing its
Luceo Asset Management and auto-enrolment propositions with
negative contributions in those divisions reducing to (GBP299,000)
and (GBP251,000) respectively (2017: (GBP314,000) and
(GBP529,000).
UNDERLYING EBITDA AND PROFIT BEFORE AND AFTER TAXATION
Underlying EBITDA increased by 7 per cent. to GBP3.42 million
from GBP3.19 million in 2017 and pre-tax profit rose by 5 per cent.
to GBP2.64 million from GBP2.52 million in 2017. This underlines
the continuing progress being made by the Group across all
operating areas. Profit after taxation at GBP2.53 million reflected
the GBP0.11 million reversal of a deferred tax asset established in
prior years as brought forward tax losses were utilised during the
year (2017: GBP2.72 million after a deferred tax credit of GBP0.20
million for future tax relief on share options).
DIVISIONAL COMMENTARY
LFA/AFFINITIES (NATIONAL)
In 2018 the Group has secured new contracts as the preferred
provider of financial advice to the members of the National
Education Union ("NEU"), following the merger of the National Union
of Teachers (not previously serviced by the Group) and the
Association of Teachers and Lecturers (existing affinity), and the
Public and Commercial Services Union, previously serviced
indirectly via a third-party. New contracts were also agreed with
Boots Pharmacists and BenefitHub.
In addition, contract renewals were agreed with the Royal
College of Nursing ("RCN"), FosterTalk, Prospect, the Association
of School and College Leaders ("ASCL"), BA Clubs and the Bakers,
Food and Allied Workers Union, and with the General Federation of
Trade Unions and Parliament Hill (both umbrella organisations for a
number of individual trades unions and associations).
These contract wins and renewals confirm LFA's position as the
financial adviser of choice for affinity groups and their members
and the continuity and extension of such arrangements underpin the
potential and future development of LFA and LMPS.
The new contract win with the NEU is particularly noteworthy as
it is a new union formed as a result of the merger of the
Association of Teachers and Lecturers ("ATL") and the National
Union of Teachers ("NUT"). Whilst LFA was the preferred supplier of
financial advice to the 126,000 members of the ATL, it did not
previously act for the 336,000 members of the NUT. The NEU is the
largest education union in the UK and the fourth largest trade
union in the TUC, with in excess of 450,000 members, bringing
together teachers, lecturers, support staff and leading workers in
maintained and independent schools and colleges across the UK.
The Group is undoubtedly the leading player within the
affinity-based market for financial services in the UK. LFA now has
a dominant position within two large areas of public service
provision - healthcare and education - through its contractual
agreements as the preferred provider of financial advice to members
of Unison, RCN, RCM, FosterTalk, the Social Workers' Union and NEU,
ASCL and the University and College Union.
The Group's dedicated mortgage offering - LMPS - continues to
gain traction within the affinity community, with 17 such
organisations now having appointed LMPS as the preferred mortgage
adviser to their members (2017: 14).
As noted above, revenues generated from affinity-based enquiries
across the Group were GBP9.74 million in 2018, an increase of
GBP0.31 million or 3 per cent. over the GBP9.43 million achieved in
2017 on a like for like basis after adjusting for the exceptional
level of pension transfer business advised on in 2017. On-going
revenues from affinity-based sources increased by 12 per cent. from
GBP4.35 million in 2017 to GBP4.89 million in 2018. This underlines
the value of establishing close relationships with affinity
organisations and their members for the mutual benefit of all
concerned.
After deducting adviser payaways, introducer payments and
directly attributable overheads, the Group's affinity business
contributed GBP2.80 million to Group profits (2017: GBP2.92 million
on a like for like basis). This contribution is expected to
increase as penetration of such relationships becomes deeper and
more effective and on-going revenues from initial advice supplied
in previous periods builds over time. LFA also leads the
distribution of the Group's Luceo Asset Management solutions.
Operating from modern premises near Brighton, with the long (130
years) lease interest owned by the Group and which supports a
professional call centre, client service and events teams,
embracing fully the Group's Fairway technology solution and its
Lighthouse Researched Solutions product range, LFA and LMPS remain
well placed to take advantage of the opportunities available as a
prime adviser to "Middle Britain".
In 2018 LFA and LMPS contributed gross revenues of GBP21.02
million (2017: GBP21.00 million) and a contribution after direct
costs of GBP5.41 million (2017: GBP5.46 million).
WEALTH ADVISORY
The Group's wealth advisory segment continued to develop well
during the year.
Average annualised gross revenue production across the employed
advisers in Carrwood working with the Group's accountancy
connections was GBP213,000 (2017: GBP215,000), reflecting the
softening of demand from the market corrections in the final
quarter of the year. New advisers recruited into this division take
longer to get to full production levels as a result of the
particular skills needed to work with accountancy firms, which is
reflected by the average effective revenue production level,
adjusted for recent starters, being GBP215,000 in 2018 against
GBP212,000 in 2017. The self-employed advisers within Wealth
achieved an average production of GBP161,000, an increase of 26 per
cent. over the GBP128,000 level recorded in 2017.
The wealth advisory segment (excluding the Group's proprietary
LPT auto-enrolment solution - see below) generated revenues of
GBP10.16 million, an increase of GBP0.87 million or 9 per cent.
from the GBP9.29 million recorded in 2017. Carrwood and Wealth
produced revenues of GBP5.70 million and GBP4.46 million
respectively (2017: GBP5.08 million and GBP4.21 million
respectively). Overall the wealth advisory segment (excluding LPT)
recorded a contribution after direct costs of GBP1.25 million
(2017: GBP1.19 million).
The Group's LPT business unit, included within the overall
wealth advisory segment, recorded revenues of GBP0.37 million
(2017: GBP0.36 million) and recorded a deficit after direct costs
of GBP0.25 million (2017: GBP0.53 million).
The combination of highly-skilled employed and experienced
self-employed advisers operating in the high-net worth marketplace
continues to provide a firm base for further growth in the wealth
management sector.
LIGHTHOUSE PENSIONS TRUST ("LPT") - RESULTS OF STRATEGIC
REVIEW
As noted in the Chairman's Statement above, the Group announced
in January 2019 that it would not be in the best interests of the
Company's shareholders to support the Trustees of the Corporate
Pensions Trust ("CPT"), which incorporates the Group's LPT
auto-enrolment solution for SMEs, in making an application to the
Pensions Regulator for authorisation.
The Group has identified Smart Pension Limited ("Smart") as an
appropriate new host. Smart is a technology based business whose
Auto-Enrolment Master Trust ("AEMT") has c95,000 participating
employers, c650,000 members and cGBP200 million assets under
management. Smart is 17 per cent. owned by Legal & General,
which also provides the default funds used by the AEMT, and J P
Morgan has since invested in the Company.
The Group has agreed to continue to fund the CPT whilst Smart
obtains its Master Trust authorisation (expected by end of April
2019) and through the subsequent transfer and wind-up processes
which are anticipated to be completed by the end of 2019. The
agreement with Smart means that the Group should retain its
recurring fees from employers, currently amounting to cGBP300,000
p.a. for assisting them with the regular payroll assessment,
starter/leaver and opt-in/opt-out work that will still be required
to be undertaken on a weekly/monthly basis. The exit from the
business (which was approaching break-even on direct costs before
the additional expenses arising from the new TOR authorisation
regime) should be cost-neutral for the Group in 2019 and make a
small contribution to results in subsequent periods.
COMMUNITIES (NETWORK) - LIGHTHOUSE ADVISORY SERVICES
("LASER")
2018 saw revenues in the communities (network) segment, LASER,
decrease by GBP1.81 million or 8 per cent. from GBP23.29 million in
2017 to GBP21.48 million in 2018, reflecting the market softening
referred to previously as well as a result of average adviser
numbers reducing from 174 to 168. Average annualised revenue
production per adviser decreased by 6 per cent. to GBP116,000 from
GBP123,000. The Group continues to focus on improving margin and on
minimising risk for itself, its clients and its network advisers.
The Group will continue to work with those firms which embrace the
full Lighthouse Fairway technology and the innovative financial
solutions provided for clients by the Lighthouse Researched
Solutions and Luceo Investment Fund range to deliver better
customer outcomes and a mutually beneficial relationship for the
Group and its advisers in this community space.
The communities segment recorded a contribution after direct
costs of GBP3.03 million in 2018 (2017: GBP2.93 million). The
improvement of GBP0.1 million reflected the benefit of general cost
control and reviews leading to expense reductions notwithstanding
the reduction in revenues and hence gross margin.
LUCEO ASSET MANAGEMENT
In 2018 the Group continued to build up its in-house investment
solutions - the Luceo Investment Funds - launched by Luceo Asset
Management Limited, a wholly-owned subsidiary of the Company, as
sponsor in October 2016. Total funds under management amounted to
GBP58 million by the end of 2018 (2017: GBP37 million), with the
figure being largely unchanged in the final quarter of 2018, when
markets fell by 10 per cent., in line with other fund managers.
The five current Luceo funds are actively managed, fund of fund
solutions made available in conjunction with Octopus Investments as
Investment Adviser, giving a range of funds that cover the main
client risk profiles applicable to such products and which provide
investments whose risk profiles exactly match those agreed at the
time of recommendation by the customer.
The Luceo Funds are available on a number of the leading
platforms, including the Lighthouse Zurich Platform, a service
exclusively available to and on terms bespoke to the Group, its
advisers and clients.
Operation of the Luceo Funds is overseen by an Investment
Committee made up of experienced investment professionals, with an
independent chairman, ensuring that the interests of customers are
always of primary concern. The Luceo Funds are primarily focused on
customers serviced by advisers within LFA who are mandated to use
the Lighthouse Researched Solutions range, including the Luceo
Funds, where appropriate for customers.
The Group continues to examine potential extensions to the Luceo
product range, including the capital protection products
underwritten for minimum capital value by Morgan Stanley and
provided by Tavistock Wealth, as part of the strategic relationship
announced with the latter in November 2018. New additions should
complement and provide additional demand for the current Luceo
Funds, managed by Octopus Investments, and help deliver improved
customer outcomes across a wider number of customers whilst
providing additional revenue and margin for the Group.
The Group continued to support its Luceo Investment Range in
2018 whilst building to the scale - GBP20 million invested per Fund
- at which they will become self-financing and indeed
profitable.
Luceo Asset Management recorded revenues of GBP0.39 million in
2018 (2017: GBP0.17 million). Underwriting the excess of the fixed
costs of operating the Funds over the Group's share of the annual
management charge together with other direct operating expenses
such as business support and the investment committee resulted in a
deficit on contribution after direct costs of GBP0.30 million
(2017: GBP0.31 million).
INDIRECT OPERATING COSTS
Indirect operating costs in 2018 amounted to GBP5.73 million, an
increase of GBP0.17 million over the 2017 level of GBP5.56 million.
The principal areas of increase were the full year impact of the
appointment of an additional non-executive director in the latter
part of 2017, together with the Group's graduate adviser training
scheme and marketing, including the appointment of Edison Research
to provide additional research on the Company in May 2018.
PROFESSIONAL INDEMNITY INSURANCE ("PII")
PII cover remains a mandatory cost for businesses that advise
clients within the UK retail financial services market. The Group
renewed its PII cover in February 2019 for a further 15 months on
substantially the same terms as in the previous policy. This was a
notable achievement given the significant tightening in the market
for providing such cover in recent months and the FCA's proposal to
increase the maximum award payable by the FOS to GBP350,000 for
advice given from 1 April 2019, which has caused considerable
nervousness amongst insurance providers. The Group is considering
the advice areas that could be impacted if this proposal were to be
enacted as part of the strategic five year planning review referred
to in the Chairman's statement.
REGULATION
2018 has seen the UK financial services distribution sector have
to deal with the implementation of the requirements of substantial
new legislation such as MiFID II and GDPR, which came into force on
3 January 2018, and 25 May 2018 respectively. The new regulations
have imposed significant additional obligations on providers and
distributors alike in areas such as client information and data
protection. The Group has allocated dedicated resource to ensure it
is fully compliant with all relevant aspects of the new legislation
and also continues to engage with regulatory authorities to ensure
on-going regulation of retail financial services is appropriate and
proportionate whilst continuing to recognise the need to minimise
risk and provide appropriate advice to and outcomes for its
customers.
On 9 December 2019 the FCA's new senior Manager and
Certification Regime comes into effect, which introduces an
enhanced governance framework for those firms within the UK
financial services sector that deal with the public, either
directly or indirectly. The Group is reviewing the new requirements
to ensure full compliance by the deadline.
CARRYING VALUE OF INTANGIBLE ASSETS AND GOODWILL
As required by accounting standards, the Board has undertaken a
review of the Group's intangible assets including goodwill arising
from business combinations as at 31 December 2018 to identify
whether any indicators of impairment existed as at that date and,
in the case of those intangible assets with indefinite useful
economic lives, whether the carrying values were supported by the
estimated net present value of future cash flow projections from
the relevant Cash Generating Units or business segments.
In the light of the results of the strategic review of the
Group's LTP workplace pensions solution (see above) the
goodwill/intangible asset of GBP49,000 previously held in relation
to this activity has been fully amortised in 2018. No other
impairment factors were identified and hence no additional
provision for impairment has been made (2017: GBPNil).
RESULTS FOR THE YEAR
The Group recorded an underlying EBITDA (before non-cash
share-based payments charge) for the year of GBP3.42 million (2017:
GBP3.19 million). After charging GBP0.40 million, GBP0.37 million
and GBP0.01 million in respect of depreciation and amortisation,
non-cash share-based payments charge and net finance costs (2017:
GBP0.27 million, GBP0.39 million and GBP0.01 million respectively),
the Group recorded a pre-tax profit of GBP2.64 million (2017:
GBP2.52 million). Post-tax profit amounted to GBP2.53 million, a
reduction of GBP0.19 million from the GBP2.72 million recorded in
2017 as a result of the reversal of part of the deferred tax asset
previously held for tax losses utilised in the year, giving a
charge to taxation of GBP0.11 million (2017: credit to taxation of
GBP0.20 million).
CASH FLOW, CASH BALANCES, TREASURY AND INVESTMENT
Year-end cash balances amounted to GBP9.55 million (2017:
GBP8.73 million). The increase of GBP0.82 million was due to the
profit after taxation for the year less working capital increases
principally as a result of the settlement of historic complaints
previously provided for, and is stated after paying dividends of
GBP0.64 million (2017: GBP0.38 million) and an investment of GBP1
million in a 5.3 per cent. stake in Tavistock Investments plc, as
part of the strategic agreement with that company referred to
above.
After allowing for regulatory and working capital considerations
the Board will continue to retain the GBP5 million of cash it holds
in excess of regulatory capital requirements in short-dated
accounts for the time being.
PROSPECTS
As noted in the Chairman's statement, the short-term outlook for
the UK economy within which the Group operates remains uncertain,
with recent market corrections reflecting investor concerns about
global trading patterns and the absence of a final defined strategy
for the UK to exit the European Union.
Notwithstanding these factors, the Group continues to enjoy
significant headroom on its regulatory capital requirement and has
continued to invest in its businesses and in new initiatives such
as the strategic agreement with Tavistock. This, together with the
continuing focus on higher margin divisions - LFA and Wealth
Advisory - and focused development of the advisers within the
network division in conjunction with the Group's Fairway technology
and carefully selected Researched Solutions, leaves the Group well
placed, with a solid financial position and net cash, to take
advantage of opportunities that may arise.
Malcolm Streatfield
Chief Executive
25 February 2019
KEY PERFORMANCE INDICATORS (KPIS)/ALTERNATIVE PERFORMANCE
MEASURES (APMS)
Lighthouse Group plc uses a number of KPIs to assess business
performance. Some are driven by metrics directly related to
International Financial Reporting Standards (IFRSs) whilst others
represent APMs.
The principal KPIs used by the Group are as follows:
KPI What is it? Why do we use it? IFRS performance Reconciled
measure? to IFRS?
Total revenue Aggregate Indicator of scale Yes N/A
income receivable and activity level
from customers of the Group
and advisers,
excluding
VAT
----------------------- ----------------------------- ----------------- -----------------------
Recurring Regular on-going Regularly recurring No Forms part
revenues charges payable income underpins of total
by customers future trading and revenue reported
for regular operating capability upon under
periodic review IFRS
of investment
portfolios
and trail/renewal
commissions
payable in
respect of
mortgages
and non-investment
insurance
products advised
upon and pre-RDR
investments
----------------------- ----------------------------- ----------------- -----------------------
Affinity revenues That proportion Servicing our affinity No Forms part
of total revenues connections is a of total
derived from key part of the revenue reported
affinity-based Group's growth strategy upon under
connections and the level of IFRS
total revenues derived
from such sources
provides a clear
indication of performance
in this critical
area
----------------------- ----------------------------- ----------------- -----------------------
Average revenue Total revenue This is a clear No Derived from
from customers generated indication of the total revenue
produced by from customers general activity reported
advisers (i.e. excluding levels of the Group's under IFRS
charges payable advisers which will and average
by advisers drive margin and adviser numbers
and other ultimately profitability
non-customer
income) divided
by average
number of
advisers in
the year
----------------------- ----------------------------- ----------------- -----------------------
Underlying Self-explanatory Underlying EBITDA No Reconciled
Earnings Before - profitability represents a close to IFRS profitability
Interest, before net proxy for cash profitability measures
Depreciation finance cost/income subject to working in the Consolidated
and Amortisation and non-cash capital and financing Statement
("Underlying expenses such costs of Comprehensive
EBITDA") as depreciation Income
and amortisation
of tangible
and intangible
assets (including
goodwill)
respectively
and share-based
payments charge
----------------------- ----------------------------- ----------------- -----------------------
Earnings per Profit after Earnings per share Yes N/A
share ("EPS") taxation attributable gives a clear indication
- basic and to equity to shareholders
diluted shareholders of the profits per
divided by share available
the total to pay dividends
number of
ordinary shares
in issue and
in the case
of diluted
also the number
of share options
outstanding
at the reporting
date and whose
exercise price
is below the
average mid-market
price of the
Company's
shares during
the year (i.e.
not anti-dilutive)
----------------------- ----------------------------- ----------------- -----------------------
Adjusted earnings As per basic The Group has historically No Fully reconciled
per share and diluted been able to utilise to IFRS EPS
- basic and earnings per significant tax
diluted share but losses generated
after eliminating in prior periods
the actual to offset taxable
charge or profits. This, together
credit for with recognition
taxation for of unutilised tax
the year and losses during a
replacing year can lead to
it with a unrepresentative
charge or tax charges or credits
credit for and make comparison
taxation calculated between financial
at the standard reporting years
rate of UK difficult. Application
Corporation of a standard tax
Tax applicable charge or credit
to the Group's enables readers
profit before of the Annual Report
taxation to make more informed
judgements of the
Group's financial
performance by removing
inconsistencies
----------------------- ----------------------------- ----------------- -----------------------
Lighthouse Group plc
Consolidated statement of comprehensive income
for the year ended 31 December 2018
2018 2017
Total Total
GBP'000 GBP'000
Revenue 53,422 54,111
Cost of sales (38,819) (39,439)
Gross profit 14,603 14,672
Administrative expenses
Other operating expenses (11,186) (11,485)
---------------------------------------- --------- ---------
Underlying earnings before interest,
tax, depreciation, amortisation
and non-cash share-based payments 3,417 3,187
---------------------------------------- --------- ---------
Depreciation and amortisation (396) (274)
Non-cash share-based payments (365) (385)
Total administrative expenses (11,948) (12,144)
--------- ---------
Operating profit 2,656 2,528
Finance income 17 3
Finance costs (29) (10)
Profit before taxation 2,644 2,521
Taxation (111) 200
Profit for the year 2,533 2,721
Other comprehensive income:
Decrease in fair value of investment
held as fixed asset (36) -
Total comprehensive income for
the year 2,497 2,721
========= =========
Basic earnings per share 1.98p 2.13p
========= =========
Adjusted basic earnings per
share 1.68p 1.59p
========= =========
Diluted earnings per share 1.82p 1.98p
========= =========
Adjusted diluted earnings per
share 1.54p 1.49p
========= =========
All activities are classed as continuing.
The profit and total comprehensive income for both 2018 and 2017
were wholly attributable to the equity holders of the Company.
Basic and diluted earnings per share are stated after the actual
tax charge or credit for the year. Adjusted basic and diluted
earnings per share are stated after deducting a notional tax
charge, calculated at the standard rate of UK corporation tax
applicable for the year, in order to aid comparison between the two
years.
Lighthouse Group plc
Consolidated statements of changes in equity
for the year ended 31 December 2018
Share Special Fixed asset Reserves Retained Total attributable
capital non- distributable investment arising earnings to equity
reserve fair value from share- shareholders
reserve based payments
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2018 1,277 1,999 - 1,487 6,924 11,687
Profit and
total
comprehensive
income for
the year - - (36) - 2,533 2,497
Transactions
with owners,
recorded directly
in equity:
Dividends
paid - - - - (639) (639)
Share-based
payment - - - 365 - 365
At 31 December
2018 1,277 1,999 (36) 1,852 8,818 13,910
-------------------- --------- -------------------- ------------ ---------------- ---------- -------------------
At 1 January
2017 1,277 1,999 - 1,102 4,586 8,964
Profit and
total
comprehensive
income for
the year - - - - 2,721 2,721
Transactions
with owners,
recorded directly
in equity:
Dividends
paid - - - - (383) (383)
Share-based
payment - - - 385 - 385
-------------------- --------- -------------------- ------------ ---------------- ---------- -------------------
At 31 December
2017 1,277 1,999 - 1,487 6,924 11,687
-------------------- --------- -------------------- ------------ ---------------- ---------- -------------------
Lighthouse Group plc
Consolidated statement of financial position
at 31 December 2018
2018 2017
GBP'000 GBP'000
Assets
Non-current assets
Intangible assets 5,247 5,131
Property, plant and equipment 1,305 1,397
Investment held as fixed asset 976 -
Deferred tax asset 839 950
8,367 7,478
--------- ---------
Current assets
Trade and other receivables 4,444 8,187
Cash and cash equivalents 9,546 8,733
--------- ---------
13,990 16,920
--------- ---------
Total assets 22,357 24,398
--------- ---------
Current liabilities
Trade and other payables 7,662 8,789
Provisions 437 2,846
--------- ---------
8,099 11,635
--------- ---------
Non-current liabilities
Provisions 348 1,076
--------- ---------
348 1,076
--------- ---------
Total liabilities 8,447 12,711
--------- ---------
Net assets 13,910 11,687
========= =========
Capital and reserves
Called up share capital 1,277 1,277
Special non distributable reserve 1,999 1,999
Fixed asset investment fair value (36) -
reserve
Other reserves - share-based payments 1,852 1,487
Retained earnings 8,818 6,924
Total equity attributable to equity
holders of the Company 13,910 11,687
========= =========
The financial information was approved by the Board of Directors
on 25 February 2019 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 year ended 31 December 2018
2018 2017
GBP'000 GBP'000
Operating activities
Profit before tax for the year 2,644 2,521
Adjustments to reconcile profit for
the year to net cash inflows from
operating activities
Finance income (17) (3)
Finance costs 29 10
Depreciation of property, plant and
equipment 232 150
Amortisation of intangible assets 164 124
Share-based payments charge 365 385
Change in trade and other receivables 3,743 817
Change in trade and other payables (1,127) (479)
Change in provisions (3,137) (2,132)
------------ ----------
Cash generated from operations 2,896 1,393
Finance costs paid (29) (10)
Net cash inflow from operating activities 2,867 1,383
------------ ----------
Investing activities
Purchase of property, plant and equipment (140) (307)
Purchase of intangible assets (280) (25)
Purchase of investment held as fixed
asset (including acquisition costs) (1,012) -
Finance income received 17 3
------------ ----------
Net cash outflow from investing activities (1,415) (329)
------------ ----------
Financing activities
Bank loan repayments - (439)
Dividends paid to equity shareholders (639) (383)
Net cash outflow from financing activities (639) (822)
------------ ----------
Increase in cash and cash equivalents 813 232
Cash and cash equivalents at the
beginning of the year 8,733 8,501
------------ ----------
Cash and cash equivalents at the
end of the year 9,546 8,733
============ ==========
Lighthouse Group plc
Notes to the financial information for the year ended 31
December 2018
1. Basis of preparation
The financial information, which comprises the Consolidated
Statement of Comprehensive Income, the Consolidated Statements of
Changes in Equity, the Consolidated Statement of Financial Position
and the Consolidated Statement of Cash Flows and the related
explanatory notes, has been extracted from the audited financial
statements for the year ended 31 December 2018 and has been
prepared on the basis of the accounting policies set out therein
and in accordance with the recognition and measurement principles
of International Financial Reporting Standards and interpretations
issued by the International Accounting Standards Board as adopted
for use in the EU ("IFRS") but does not contain all the disclosures
necessary for full compliance with IFRS.
The financial information set out above does not constitute the
Company's statutory accounts within the meaning of Section 434 of
Companies Act 2006 for the years ended 31 December 2018 or 2017 but
is derived from those accounts. Statutory accounts for 2017 have
been delivered to the registrar of companies, and those for 2018
will be delivered in due course. The auditor has reported on those
accounts; their reports were (i) unqualified, (ii) did not include
a reference to any matters to which the auditor drew attention by
way of emphasis without qualifying their report and (iii) did not
contain a statement under section 498 (2) or (3) of the Companies
Act 2006.
2. Earnings per ordinary share
The calculation of the basic and diluted earnings per share
attributable to equity shareholders of the parent company is based
on the following data:
2018 2018 2017 2017
Basic/diluted Adjusted Basic/diluted Adjusted
Profit for the purposes
of basic and dilutive earnings
per share (GBP'000) 2,533 2,142 2,721 2,035
================ ============== ================ ==============
Weighted average number
of ordinary shares for the
purpose of basic earnings
per share 127,700,298 127,700,298 127,700,298 127,700,298
Effect of the dilutive potential
on ordinary shares: share
options 11,729,131 11,729,131 9,378,939 9,378,939
---------------- -------------- ---------------- --------------
Weighted average number
of ordinary shares for the
purpose of diluted earnings
per share 139,429,429 139,429,429 137,079,237 137,079,237
================ ============== ================ ==============
Profit for the purposes of calculating adjusted basic and
diluted earnings as set out above are stated after excluding the
deferred tax charge of GBP111,000 in 2018 (2017: deferred tax
credit of GBP200,000) and applying a standard rate of tax of 19 per
cent. (2017: 19.25 per cent.) to the profit before taxation in the
relevant year.
3. Segment information
Segment information for the Group for the year ended 31 December
2018 is set out below:
Year ended 31 December National Communities Wealth Other Total
2018 advisory segments
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Total revenues 21,016 53,033 10,533 389 84,971
Less: inter-segment
revenues - (31,549) - - (31,549)
--------- ------------ ---------- ---------- -----------
External revenues 21,016 21,484 10,533 389 53,422
Cost of sales (13,312) (17,914) (7,020) (573) (38,819)
--------- ------------ ---------- ---------- -----------
Gross profit 7,704 3,570 3,513 (184) 14,603
Direct operating expenses (2,290) (540) (2,514) (115) (5,459)
--------- ------------ ---------- ---------- -----------
Segment contribution
before indirect operating
expenses 5,414 3,030 999 (299) 9,144
--------- ------------ ---------- ----------
Indirect operating
expenses (5,727)
-----------
Underlying EBITDA 3,417
Depreciation and amortisation (396)
Non-cash share-based
payments charge (365)
-----------
Operating profit 2,656
Finance revenues 17
Finance costs (29)
-----------
Profit before taxation 2,644
-----------
The revenue, costs and profit associated with the Group's
Lighthouse Mortgage and Protection Services ("LMPS") business have
been included within the National segment, having previously been
reported within the Communities segment. The change reflects the
increasingly close operating relationship between Lighthouse
Financial Advice ("LFA"), which has historically comprised the
National segment, and LMPS, covering marketing, lead generation and
adviser administration and diary management. The change increased
revenues, gross margin and contribution within the National segment
by GBP1,475,000, GBP405,000 and GBP175,000 respectively. The 2017
comparatives below have been restated as a result (revenue, gross
margin and contribution adjustments of GBP1,161,000, GBP290,000 and
GBP63,000 respectively).
Other segments in 2018 comprise the results of Luceo Asset
Management Limited ("Luceo"), the Company's wholly-owned subsidiary
that sponsors risk-aligned investment solutions that are made
available to the Group's customers. Other segments in 2017 included
revenue, gross margin and contribution in respect of Luceo of
GBP167,000, (GBP176,000) and (GBP313,000) respectively.
Year ended 31 December National Communities Wealth Other Total
2017 (restated) (restated) advisory segments
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Total revenues 21,001 53,871 9,652 167 84,691
Less: inter-segment
revenues - (30,580) - - (30,580)
------------ ------------ ---------- ---------- ---------
External revenues 21,001 23,291 9,652 167 54,111
Cost of sales (13,345) (19,309) (6,442) (343) (39,439)
------------ ------------ ---------- ---------- ---------
Gross profit 7,656 3,982 3,210 (176) 14,672
Direct operating
expenses (2,193) (1,055) (2,545) (137) (5,930)
------------ ------------ ---------- ---------- ---------
Segment contribution
before indirect operating
expenses 5,463 2,927 665 (313) 8,742
------------ ------------ ---------- ----------
Indirect operating
expenses (5,555)
---------
Underlying EBITDA 3,187
Depreciation and
amortisation (274)
Non-cash share-based
payments charge (385)
---------
Operating profit 2,528
Finance revenues 3
Finance costs (10)
---------
Profit before taxation 2,521
---------
Segment assets and liabilities at 31 December were as
follows:
2018 2017
GBP'000 GBP'000
Segment assets
National 2,110 1,381
Communities 15,573 17,746
Wealth advisory 4,014 3,993
Other segments and unallocated 9,163 7,792
-------- --------
Total assets including inter-segment 30,860 30,912
Inter-segment assets (8,503) (6,514)
-------- --------
Total assets per financial statements 22,357 24,398
-------- --------
Segment liabilities
National 1,024 1,176
Network 5,864 9,543
Wealth management 1,804 1,174
Other segments and unallocated 8,258 7,332
-------- --------
Total liabilities including inter-segment 16,950 19,225
Inter-segment liabilities (8,503) (6,514)
-------- --------
Total liabilities per financial statements 8,447 12,711
-------- --------
4. Dividends
The directors recommend the payment of a final dividend for the
year ended 31 December 2018 of 0.50 pence per ordinary share (2017:
0.30 pence per ordinary share).
5. Annual report
The annual report, audited financial statements and notice of
annual general meeting will be posted to shareholders on or about
12 March 2019 and copies are available for collection indefinitely
from the Company's registered office at 26 Throgmorton Street,
London, EC2N 2AN or at the Group's website
(www.lighthousegroup.plc.uk). A further announcement will be made
in due course.
- Ends -
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR SEFEFIFUSEEE
(END) Dow Jones Newswires
February 26, 2019 02:01 ET (07:01 GMT)
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