Lighthouse Group reports 205% Net Income growth while 2.0% Revenue decline
21 Feb 2017 • About Lighthouse Group (
$LGT) • By InTwits
Lighthouse Group reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 4.6% in 2016, 3.3% in 2015, 2.6% in 2014, 0.4% in 2013, 2.7% in 2012
- Lighthouse Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.7%.
- The company has highly profitable business model: ROIC is at 25.7%
- It operates with high leverage: Net Debt/EBITDA is -3.8x while industry average is -4.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Lighthouse Group ($LGT) key annual financial indicators
| mln. £ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 55.045 | 47.884 | 46.798 | 48.881 | 47.919 | -2.0% |
| Gross Profit | 15.057 | 15.026 | 13.351 | 14.824 | 14.467 | -2.4% |
| EBITDA | 1.509 | 0.215 | 1.202 | 1.610 | 2.208 | 37.1% |
| Net Income | -3.516 | -1.604 | 0.557 | 0.866 | 2.643 | 205.2% |
Balance Sheet
|
|---|
| Cash | 10.489 | 9.507 | 9.064 | 8.389 | 8.501 | 1.3% |
| Short Term Debt | 0.000 | 0.000 | 1.505 | 0.034 | 0.034 | 0.0% |
| Long Term Debt | 0.000 | 1.858 | 0.473 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 0.165 | 1.269 | 0.097 | 0.119 | 0.126 | 5.9% |
Ratios
|
|---|
| Revenue growth | -8.8% | -13.0% | -2.3% | 4.5% | -2.0% | |
| EBITDA growth | -5.7% | -85.8% | 459.1% | 33.9% | 37.1% | |
| Gross Margin | 27.4% | 31.4% | 28.5% | 30.3% | 30.2% | -0.1% |
| EBITDA Margin | 2.7% | 0.4% | 2.6% | 3.3% | 4.6% | 1.3% |
| Net Income Margin | -6.4% | -3.3% | 1.2% | 1.8% | 5.5% | 3.7% |
| CAPEX, % of revenue | 0.3% | 2.7% | 0.2% | 0.2% | 0.3% | 0.0% |
| ROIC | 7.2% | -3.9% | 8.6% | 14.6% | 25.7% | 11.2% |
| ROE | -38.8% | -25.2% | 9.6% | 13.8% | 34.0% | 20.2% |
| Net Debt/EBITDA | -7.0x | -35.6x | -5.9x | -5.2x | -3.8x | 1.4x |
Revenue and profitability
The company's Revenue decreased slightly on 2.0% in 2016. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.3 pp from 3.3% to 4.6% in 2016.
Gross Margin showed almost no change in 2016.
Net Income marign increased on 3.7 pp from 1.8% to 5.5% in 2016.
Capital expenditures (CAPEX) and working capital investments
Lighthouse Group's CAPEX/Revenue was 0.26% in 2016. The company showed decline in CAPEX/Revenue of 2.4 pp from 2.7% in 2013 to 0.26% in 2016. Average CAPEX/Revenue for the last three years was 0.24%.
Return on investment
The company operates at high and attractive ROIC (25.72%) and ROE (34.05%). ROIC surged on 11.2 pp from 14.6% to 25.7% in 2016. ROE jumped on 20.2 pp from 13.8% to 34.0% in 2016.
Leverage (Debt)
Debt level is -3.8x Net Debt / EBITDA and 0.0x Debt / EBITDA. Net Debt / EBITDA surged on 1.4x from -5.2x to -3.8x in 2016. Debt didn't change in 2016 while cash increased slightly on 1.3% in 2016.
Valuation
The company's trades at EV/EBITDA 4.5x and P/E 7.0x while industy averages are 15.6x and 19.1x.
Appendix 1: Peers in Financial Services
Below we provide Lighthouse Group benchmarking against other companies in Financial Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Volvere ($VLE) | -47.1% | 149.8% | -23.2% | 124.9% | |
| Real Estate Credit Investments Pcc ($RECP) | | 335.8% | -59.6% | 47.3% | -29.8% |
| Fairpoint Group ($FRP) | 32.7% | -17.5% | 35.1% | 41.2% | |
| Afh Financial Group ($AFHP) | | 49.9% | 39.3% | 39.5% | 15.0% |
| Manx Financial Group ($MFX) | 5.6% | 33.3% | 22.0% | 28.2% | |
| |
|---|
| Median (30 companies) | 5.6% | 14.7% | 6.8% | 2.7% | 4.1% |
|---|
| Lighthouse Group ($LGT) | | -13.0% | -2.3% | 4.5% | -2.0% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Record ($REC) | 98.8% | 98.8% | 99.6% | 99.3% | 99.0% |
| Panmure Gordon & Co ($PMR) | 95.2% | 95.0% | 95.3% | 95.2% | |
| First Property Group ($FPO) | 86.0% | 69.5% | 67.9% | 83.0% | 80.6% |
| Schroders ($SDRC) | 76.9% | 76.2% | 77.7% | 78.3% | |
| London Capital Group Hldgs ($LCG) | 64.2% | 70.5% | 73.6% | 67.9% | |
| |
|---|
| Median (15 companies) | 56.8% | 53.3% | 53.0% | 52.8% | 59.3% |
|---|
| Lighthouse Group ($LGT) | 27.4% | 31.4% | 28.5% | 30.3% | 30.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Livermore Investments Group Ltd ($LIV) | 84.9% | 64.8% | 78.8% | 83.5% | |
| Real Estate Credit Investments Pcc ($RECP) | 58.6% | 89.3% | 77.0% | 80.3% | 79.3% |
| Manx Financial Group ($MFX) | 39.8% | 49.2% | 56.5% | 58.8% | |
| Hargreaves Lansdown ($HL.) | 64.1% | 66.4% | 58.7% | 51.2% | 57.5% |
| Daishin Securities Co ($DSS) | 53.8% | 51.5% | 38.8% | 49.2% | 38.9% |
| |
|---|
| Median (28 companies) | 14.9% | 17.0% | 16.8% | 16.9% | 20.8% |
|---|
| Lighthouse Group ($LGT) | 2.7% | 0.4% | 2.6% | 3.3% | 4.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| London Capital Group Hldgs ($LCG) | 1.8% | 0.2% | 3.4% | 7.7% | |
| Daishin Securities Co ($DSS) | 6.0% | 24.7% | 15.0% | 6.5% | 15.1% |
| Commercial Bank Of Qatar(The) ($CBQS) | 6.0% | 3.8% | 2.8% | 3.9% | |
| Nmbz Hldgs ($NMB) | 6.1% | 3.0% | 2.1% | 3.8% | |
| Afh Financial Group ($AFHP) | 1.6% | 1.5% | 0.7% | 3.8% | 1.8% |
| |
|---|
| Median (29 companies) | 1.4% | 1.3% | 1.3% | 1.2% | 1.1% |
|---|
| Lighthouse Group ($LGT) | 0.3% | 2.7% | 0.2% | 0.2% | 0.3% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Hargreaves Lansdown ($HL.) | 108.7% | 111.7% | 101.0% | 87.5% | 90.0% |
| Manx Financial Group ($MFX) | 8.0% | 19.7% | 29.7% | 40.2% | |
| Record ($REC) | 23.8% | 19.6% | 20.2% | 20.2% | 18.5% |
| Impax Asset Management Group ($IPX) | -13.7% | 17.2% | 18.7% | 16.1% | 15.0% |
| S & U ($46IE) | 17.6% | 19.1% | 19.7% | 13.9% | 14.5% |
| |
|---|
| Median (30 companies) | 5.2% | 6.3% | 9.2% | 7.3% | 9.9% |
|---|
| Lighthouse Group ($LGT) | 7.2% | -3.9% | 8.6% | 14.6% | 25.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Private & Commercial Finance Group ($PCF) | 12.8x | 14.3x | 13.9x | 12.9x | 10.6x |
| First Property Group ($FPO) | 3.6x | 3.0x | 5.6x | 12.3x | 9.4x |
| Canaccord Genuity Group Inc ($CF.) | | | | 10.2x | |
| Daishin Securities Co ($DSS) | 1.5x | 2.4x | 10.7x | 8.0x | 13.4x |
| S & U ($46IE) | 1.4x | 1.3x | 1.7x | 3.1x | 0.5x |
| |
|---|
| Median (25 companies) | -1.0x | -1.0x | -1.9x | -0.5x | -0.5x |
|---|
| Lighthouse Group ($LGT) | -7.0x | -35.6x | -5.9x | -5.2x | -3.8x |
