# Lighthouse Group plc Q&A: Highlights of Final Results for Year-Ended 31 December 2016 (LON:LGT)

- Link: https://www.directorstalkinterviews.com/lighthouse-group-plc-qa-highlights-final-results-year-ended-31-december-2016-lonlgt/412724369
- Published: 2017-02-23T09:30:12+00:00
- Author: Amilia Stone

**Lighthouse Group plc** (LON:LGT) Chief Executive Officer Malcolm Streatfield caught
up with DirectorsTalk for an exclusive interview to discuss the highlights of their
final results for year ended 31st December 2016, the sunset clause & what this means
for Lighthouse, what their focus will be & what to expect in 2017

 

**Q1: Malcolm, you’ve announced strong results for 2016 this morning, can you talk
us through the highlights?**

**A1**: Yes, certainly. The highlights for us was the 37% increase in our EBITDA
to £2.2 million as opposed to £1.6 million the previous year so a very healthy increase,
this manifested itself in pre-tax profits increasingly by £1 million, or 119%, to
£1.9 million as opposed to the £0.9 million in the year before. That came about 
really as a very pleasing seeing that the average revenue per adviser continues 
to increase, up 6% to now £99,000 on average across the group, so that’s very pleasing
and it’s a year-on-year improvement since the introduction of the retail distribution
review, now 4 years ago. Recurring revenues, that money that clients pay us each
and every year, is now approaching 50% of all our revenues from our clients which
is a very healthy strong reoccurring revenue base which is also very pleasing. This
has manifested itself in adjusted basic earnings per share increasing by 120% and
the Board recommending the final dividend of 0.18p per share which is 13% increase
on the year before and we maintain a very healthy balance sheet with cash in excess
of over £8 million of which £4 million of added surplus to regulatory requirements.
So, all of these result manifest itself in a very strong balance sheet as well so
overall the results for 2016 are very pleasing.

 

**Q2: Can you tell us a little bit more about the sunset clause arrangements introduced
by the FCA and what this means for Lighthouse Group plc?**

**A2**: The sunset clause was highlighted just after the introduction of the RDR
where the regulator wanted all adviser remuneration to be on a customer-agreed basis
and it’s been going a while. The tradition forms of reward for an adviser was to
agree a fee with the client upfront and then a small percentage of the annual asset
under management being given as a credit to the adviser. Well, the regulator thought
this was inappropriate, they’d rather see all revenue to advisers pre-agreed with
the customer and operate on that basis. So, they highlighted that, we had about 
2 years’ notice, they highlighted that from a certain date, from 1st April last 
year, all revenue that was on an occurring basis, that sat on a platform, that didn’t
have customer agreed with the motion agreement in place, would revert to clean share
class with benefits to customer but the adviser would no longer receive the reoccurring
revenue. So, as a one-off hit, most of our clients now are actually agreeing to 
pay into us each and every year. This historic legacy matter is a tidying up exercise
by the regulator, a bit annoying but you move on, it’s a one-off hit, we’ve adjusted
for that and then we’ll build that revenue back up again in the period going forward.

 

**Q3: Now, the Group seems well positioned, can you tell us where the focus will
be for 2017 and what we can expect from Lighthouse Group PLC this year?**

**A3**: Well, our continued drive into our affinity space, we’ll make a piece in
our results announcing about our affinity groups which have now grown to 19 in number,
we put on 3 new affinity’s last year. As I’ve said before in previous times, we’ve
got reach into 6 million UK customers who are members of these affinity groups and
we’re engaging with an ever-increasing number of members of these groups and we 
really are gearing up our operations, more certainly our dealings with our affinity
groups. We dealt with about 15,000 customers last year, that’s on the border end
of the affinity groups that we have and that continues to rise and the infrastructure
to support that is all in place and with the launch of our product set, like Luceo
Asset Management, we’ve created a set of products now that really do resonate in
which we would describe as middle-Britain. These are investments built for them 
in terms of aligning the clients risk profile to the profile of the investment and
we believe that in 2017 we’ll see quite a bit more traction into what is now our
Luceo Fund range. Of course, we continue to operate in the auto-enrolment space 
for pensions and 2017, into 2018, there are still around about 1 million businesses
that have got to auto-enrol their staff into pension schemes and we’re well positioned
with our own auto-enrolment solutions so, more of that you will see in 2017 I’m 
sure.

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