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Lighthouse boosts profits as group expels ‘less productive’ advisers

by: IFAonline
  • 26/09/2011
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Lighthouse Group profits rose in the first half of 2011 as the company improved gross margins and cut operating costs.

The group saw earnings before interest, taxes, depreciation and amortization (EBITDA) rise to £967,000 in H1 (2010: £648,000).

This was despite a 5% reduction in revenues as a consequence of “less productive” advisers leaving the group, Lighthouse said. Adviser numbers during the period fell from 820 in the six-month period last year to 713 this year.

There was a non-recurring charge of some £2.9m as a result of the winding down of the Falcon advisory proposition, meaning the loss before taxation for the period was £2.4m (against a £117,000 profit in H1 2010).

The winding down of Falcon follows the rationalisation of that entity and LighthouseXpress, which are now collectively known as Lighthouse Adviser Services.

Lighthouse said, as a result of this process, certain aspects of Falcon’s historical trading have become the subject of review. The Board has therefore made a provision of £2.5m in respect of closure costs and what it said were “other potential historic liabilities”. This adds to £400,000 already racked up in the form of winding down costs.

Elsewhere, the group said it continued to increase recurring revenues. During the first half of 2011, recurring revenues rose to £8.7m (against £8.3m in H1 last year) on a like for like basis), an increase of some 5%.

Cash balances amounted to £13.6m at the period end, compared to £12.3m at the end of the corresponding previous period.

David Hickey (pictured), executive chairman of Lighthouse Group, said: “Trading progressed well during the period, with EBITDA rising for the fifth consecutive results announcement.

“The proportion of recurring revenues now exceeds 28% of the total and continues to rise, with the group’s operations continuing to generate cash.”

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