Interim results for the six months ended 30 June 2001

Interim results for the six months ended 30 June 2001 27th September, 2001 - Lighthouse Group Plc ("Lighthouse"), a supplier of support services to wealth management consultants across the UK, today announces its interim results for the six months ended 30th June 2001. In line with the objectives set out in its prospectus of October 2000, the Group has achieved a number of significant goals keeping it on- line to deliver its stated objectives. These include: Highlights A total of 46 Practices now signed up with 122 advisers. Target of 65 Practice Principals already exceeded and target of 50 Practices clearly achievable in current year. Average annualised income of Practice Principals approximately £200,000, against a more typical level of £82,000. Firm positioning established as an independent Wealth Management group. Turnover at £407,000 and a loss before tax of £1,085,000. Key collaborations and joint ventures signed. David Hickey, Chairman, said today, "Lighthouse has been able to differentiate itself through its commitment to the provision of an independent financial advisory service to corporate and private clients. The Lighthouse proposition is one of quality before quantity with the most able advisers receiving personal coaching and business development assistance. With our initial recruitment phase completed Lighthouse is now perfectly placed to open up clear water between it and the rest of the IFA sector." Matthew Goldsmith, Chief Executive, added, "We have seen very considerable progress towards the achievement of the Company's objectives against a growing background of change in the IFA sector. We have already achieved our first target of critical mass and, encouragingly, have been able to attract the highest levels of adviser to our ranks. Whilst delays have been experienced in bringing some of these individuals on-line to produce revenues for the Group, the Board is confident that these are timing issues and that the Company is on target to achieve its stated goals." Enquiries : Lighthouse Group plc 020 7065 5655 Matthew Goldsmith - Chief Executive 020 7065 5603 Kevin Lawrence - Group Finance Director 020 7065 5604 Alex Glover / Kate Adamson - WMC 020 7591 3999 www.lighthousewmc.com CHAIRMAN'S STATEMENT I am pleased to announce the maiden interim results for Lighthouse Group plc in respect of the six month period to 30th June 2001. The period since my last statement has seen very considerable progress in the achievement of the Company's objectives against a background of increasing change in the IFA sector. WEALTH MANAGEMENT The public are getting wealthier, and at the top end even more so. The problem facing the traditional IFA is that they have only a limited number of solutions to a client's circumstances, this inevitably leads to a "product sales" approach rather than a financial advisory service. It was for this reason that the Company's branding was refined during the period to "Wealth Management Consultants", a step that was strongly welcomed by our Principals, Advisers, and clients. Lighthouse advisers receive personal coaching and business development assistance, which allows them to offer services beyond the traditional pensions, life assurance and basic investment advice. In addition they can facilitate tax advice at a personal and corporate level, corporate advice, alternative investment strategies and general business consultancy as part of the broader services offering. The Lighthouse adviser sits centrally within a network of professional relationships which can be activated at any time with the client gaining access to real expertise in the appropriate organisation. This positioning is being pursued not only because it should be intrinsically more profitable as a business, but also to ensure that as the structural change, away from commissions and towards fees, gathers pace in the industry, Lighthouse will be well positioned to benefit accordingly. RECRUITMENT Being a new company, Lighthouse's first target was to create critical mass. Accordingly, at the time of its flotation the Lighthouse Board set itself various targets to be achieved by the end of December 2001. These targets included achieving 50 Locations, 65 Practice Principals, and 185 Advisers in total. As the first six months of the year progressed, it became obvious that the Lighthouse concept and its brand were both securing growing recognition in the market place. This resulted in a steady stream of high quality candidates being attracted to the company, including some of the top performers from prominent direct sales forces. As a result, I am now pleased to tell you that at 30th June, 2001, Lighthouse had 30 Locations, 69 Practice Principals, and 35 Advisers. As of today, your Company has 46 Locations, 72 Practice Principals, and 50 Advisers. You will see from these statistics that at this rate the Practice Principals target has already been achieved, the Location target will be comfortably exceeded, with the more junior adviser positions being "in- filled" within the Practices already established. This will ensure that we move towards our total Adviser target but with a predominance of Practice Principals. Lighthouse is also seeking to maximise opportunities in the corporate marketplace. Partly to that end the Lighthouse MBA has recently been launched, in conjunction with the Institute of Financial Planning and the Open Learning Company. This is expected to produce a new breed of consultant, conversant both with individual and corporate requirements. REVENUE PERFORMANCE The acid test of whether Lighthouse is succeeding in recruiting at the top end of the IFA market is the level of revenue generated per Practice Principal. I am pleased to tell you that on the basis of performance recorded to date, Lighthouse is currently seeing annualised revenue per Practice Principal of approximately £200,000 which is significantly ahead of traditional levels seen in the industry. It is very noticeable that once advisers become fully operational, their average productivity rises significantly above their own historic performance, as they get increasing exposure to Lighthouse products and corporate partners as well as to Peak Practice and Moneypennies, the in-house business development consultants of Lighthouse. While recruitment and creation of new practices has been the dominant focus during the first half of the year, increasingly the emphasis has shifted towards getting the new recruits operational. Where they have been existing IFA practitioners, this process is quite straightforward however, to date the majority of recruits have been from the direct sales forces. We have experienced delays in getting these recruits trading, in some cases up to four months, which have been frustrating for all concerned. Much effort is now being devoted to removing these delays and the Group has had considerable help from its compliance service providers, Bankhall Investment Associates Limited, which has been instrumental in reducing the time required to get new recruits up and trading. While these delays have impacted revenues to date, some of the effect is expected to reverse in the second half of the year and next year should not be materially affected. FINANCIAL REVIEW The financial results are set out below. Turnover for the period to 30th June 2001 amounted to £407,000, producing a loss before taxation of £1,085,000. The delays experienced in getting certain of the new practices operational have adversely affected the results to date, however the Board believes this is a timing issue. Indeed, management accounts for the month of August show that the Group has had its first profitable trading month at the pre-tax level. This partly reflects the increasing number of recruits now becoming operational. As forecast in the prospectus, the directors do not recommend the payment of a dividend at this stage. OUTLOOK The structural changes in the IFA sector involving, in particular, the contraction of the traditional life company sales forces and the looming de-polarisation of the sector, that is to say the abandonment of the distinction between IFA's and tied advisers, continue to throw up opportunities for Lighthouse. As a consequence of these changes and the very substantial progress made towards achieving the Group's own targets, the Board remains confident of the prospects for Lighthouse. David Hickey Chairman 27th September 2001 Consolidated profit and loss account for the 6 Unaudited months ended 30 June 2001 6 months ended 30th June 2001 £ Turnover 407,462 Cost of sales (100,248) Gross profit 307,214 Administrative expenses (1,429,27 4) Operating loss (1,122,06 0) Net interest income 37,290 Loss on Ordinary activities before taxation (1,084,77 0) Taxation - Loss for the period (1,084,77 0) Basic earnings/(loss) per share (8.678)p Diluted earnings/(loss) per share (8.677)p There are no other recognised gains or losses other than the loss for the period. Consolidated Balance Sheet as at 30 June 2001 Unaudited 30 June 2001 £ Fixed assets Intangible assets 678,416 Tangible assets 200,023 878,439 Current assets Investments 1,600,000 Debtors 797,877 Cash at bank and in hand 14,944 2,412,821 Creditors: amounts falling due within one year 956,581 Net current assets 1,456,240 Total assets less current liabilities 2,334,679 Creditors: amounts falling due after more than one 300,000 year Net assets 2,034,679 Capital and reserves Share capital 125,000 Share premium account 3,246,806 Profit and loss account (1,337,12 7) Equity Shareholders' funds 2,034,679 Consolidated cash flow statement for the period Unaudited ended 30 June 2001 6 months ended 30 June 2001 £ Net cash outflow from operating activities (1,353,59 9) Returns on investments and servicing of finance Interest received 38,801 Interest paid (1,511) Net cash inflow from returns on investments and 37,290 servicing of finance Capital expenditure Payments to acquire tangible fixed assets (61,594) Payments to acquire intangible assets (10,349) (71,943) Management of liquid resources Redemption of current asset investment 150,000 Acquisitions and disposals Purchase of business (31,000) Net cash flow before financing (1,269,25 2) Financing Issue of ordinary share capital - Expenses of issue of share capital - (Decrease)/Increase in cash (1,269,25 2) Analysis of net cash / At 1 January Cash Flow At 30June (debt) 2001 £ 2001 £ £ Cash at bank and in hand 879,254 (864,310) 14,944 Bank overdraft - (404,942) (404,942) 879,254 (1,269,25 (389,998) 2) Net cash outflow from operating activities Unaudited 6 months ended 30 June 2001 £ Operating loss (1,122,06 0) Depreciation charges 37,850 Goodwill amortisation 27,183 Decrease / (increase) in debtors (44,788) (Decrease) / increase in creditors (251,784) Net cash outflow from operating activities (1,353,59 9) NOTES TO THE FINANCIAL STATEMENTS 1. The results for the six months ended 30th June 2001 and the balance sheet at that date are unaudited. No figures have been provided for the previous corresponding period, or for the 12 months ended 31 December 2000 because the directors do not believe that they would be comparable. Lighthouse Group was formed in April 2000 and no interim results were published fro the period ended 30 June 2000. The results for the period ended 31 December 2000 reflected the financial performance for Lighthouse Independent Financial Advisers Limited since April 2000, and the financial performance of Lighthouse IFA (Kent) Limited since 15 September 2000, the date on which this company was acquired. 2. Earnings per share have been calculated based on the loss on ordinary activities after taxation and the weighted average number of shares in issue for the period of 12,500,000 (December 2000 7,241,765) 3. The interim financial statements above do not comprise statutory accounts for the purpose of S240 or the Companies Act 1985. 4. A copy of this Interim Statement is being sent to all shareholders and copies are available for collection indefinitely from the Company's Registered Office at the address below: Lighthouse Group Plc 26 Throgmorton Street London EC2N 2AN Telephone: 020 7065 5655 Fax: 020 7065 5656 www.lighthousewmc.com ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/09/27/20010927BIT00360/bit0001.doc http://www.waymaker.net/bitonline/2001/09/27/20010927BIT00360/bit0001.pdf