Lighthouse Group plc (LON:LGT) Chief Executive Officer Malcolm Streatfield caught up with DirectorsTalk for an exclusive interview to discuss their interim results for the six months ended 30th June 2018.
Q1: Congratulations Malcolm on yet another period of growth for Lighthouse Group, can you talk us through the highlights for the first half of the year?
A1: Certainly, we were very pleased to put out our results this morning.
Revenues were up 5% on the corresponding period last year to a healthy £26.88 million and running alongside that the recurring revenues generated from clients up double digit by 11% to £13.19 million. That now means that 51% of our revenue is on a recurring basis which has been a long-held ambition of ours to get our recurring revenues to over a half of our revenues and we appear to have achieved that in the first half.
All that means our underlying EBITDA, earnings before interest, taxes, depreciation, is up 26% to £1.65 million and it was very pleasing to be able to report it, a very healthy 26% increase to our EBITDA. Profit before tax up 12% to £1.26 million, again that’s a healthy increase on the previous period.
We’ve done all of that whilst containing our operating costs, in fact we saw a small decrease by £143,000 to £5.54 million. The EBITDA is really flowing through to our net cash balances now which you’ll see in the period is up to £9.6 million from this time last year where it was £8.1 million so we really are putting cash onto the balance sheet now.
All of that gives the Board confidence to continue our progressive dividend policy and our interim dividend we’re delighted to have put up to .2p per share and that is a healthy 67% increase on the same period last year. So, all in all, a very positive set of first half year from our perspective.
Q2: So, LFA and your affinity partners remain a key focus for growth, can you tell us how this side of the business is progressing through 2018?
A2: We’re also delighted in this set of numbers to report of LFA, Lighthouse Financial Advice, and its good work with our affinity relationships. Our affinity relationships are 21 in number, they’re all contracted relationships and they represent, through these affinity groups, about 6 million UK people all of whom are at work. They represent in the population, senior civil servants, a lot in the medical profession and certainly a fair number in the education profession.
That new business from those affinity relationships grew in the period by another 44.5% to £2.6 million, up from £1.8 million this time last year. The total revenues from affinity relationships up 20% to £5.1 million, the period last year was £4.3 million. So, evidencing that we are continuing to make a very strong progress with our engagement with our affinity partners. This is all reflects itself in the average production per adviser which is a good measure and that was up by 6% to £124,000, an increase of £7,000 per adviser in the period.
Our LFA division which works with the affinity groups supports our Luceo Asset Management investment solutions, I’m also pleased to report that that has grown very healthily to now £53 million under management under our five funds that we launched at the beginning of the last trading year.
As I said earlier, 51% of the group revenues are generated from customers is now on a recurring basis which is a very healthy position to be in.
Q3: What is your strategy for the near and long-term for LFA?
A3: LFA has proven that it can now service very effectively affinity relationships, that’s evidenced in a number of ways.
One of the evidences that was very pleasing is that 9 of the 21 affinity groups came up for renewal in the first half of the year and we renewed every single one of those as a new contract running for an average time of 2-3 years before they need to be renewed again. That underscores our belief that what we’re doing in the field with our affinity relationships is positive and recognised as such with the people we’ve engaged with.
Our relationships with the education sector means that we are now the dominant supplier of financial advice to members of the education sector all the way through from primary schools all the way through to university. Similarly, we have relationships throughout the medical and healthcare sector and we are dominating the provision of financial advice into those areas as well.
So, our strategy is really anchored about developing our relationships more deeper with these organisations and getting to see more and more of the customers that may want to engage with us.
Q4: How has the second half of the year started, do you remain confident in Lighthouse Group meeting expectations for the year?
A4: Yes, we’ve said in the announcement that we are confident that we’ll meet expectations for the remaining part of the year. July was positive in our terms and August we’re still awaiting the numbers but as a management team, we’re confident in the numbers we have in the market currently.
