Proactiveinvestors United Kingdom Lighthouse Group Proactiveinvestors United Kingdom Lighthouse Group RSS feed en Tue, 23 Jul 2019 08:44:36 +0100 Genera CMS (Proactiveinvestors) (Proactiveinvestors) <![CDATA[News - Quilter to buy financial advisory service firm Lighthouse for £46.2mln ]]> UK wealth manager Quilter has agreed to buy financial advisory service firm Lighthouse for £46.2mln.

Lighthouse, an AIM listed firm with 400 financial advisers, will merge with Quilter’s advice business, Intrinsic.

Quilter, which made its stock market debut in June 2018 after being spun out of Old Mutual, will pay £42.2mln for the acquisition after adjusting for £4mln of excess cash on Lighthouse’s balance sheet.  

READ: Quilter proposes inaugural final dividend after 2018 profit and revenue rises despite tough markets

The deal represents a 24.5% premium to Lighthouse's closing share price of 26.5p on Tuesday.

Quilter chief executive, Paul Feeney, said: "As the advice market consolidates the strategic acquisition of Lighthouse will help secure Quilter’s position as the place to go for trusted financial advice in the UK."

Lighthouse chairman, Richard Last, said: "We have continued to make good financial and strategic progress in recent years despite softening market conditions and a tougher regulatory backdrop.

"However, the board believes that Lighthouse will benefit significantly from becoming part of Intrinsic and the wider Quilter group and will be better positioned to deliver an enhanced customer proposition and offer increased opportunities to current staff and advisers that will be available within a larger group."

Last, who will stand down as chairman in May after seven years in the role, added that the acquisition provides Lighthouse shareholders with the opportunity to realise their investment in full and in cash at an attractive premium to the levels at which the share price has traded in recent months. 

The executive management team of Intrinsic, which has 3,500 advisers, is expected to replace Last as chairman and Lighthouse non-executive directors.

The deal is expected to be completed in the second quarter of 2019.

In February, Lighthouse reported a 5% rise in profits to £2.6mln for 2018 on revenue that was largely flat at £53mln.

In morning trading, Lighthouse shares jumped 20.9% to 32.05p while Quilter shares were little changed at 153.08p.

Wed, 03 Apr 2019 10:17:00 +0100
<![CDATA[News - Lighthouse Group trading ahead of comparative in first six months of 2018 ]]> Lighthouse Group PLC (LON:LGT) said it is trading ahead of its 2017 comparative in the first six months of 2018.

In a trading update ahead of its half-year results, the AIM-listed financial advisory service said it had continued to trade positively in the first half of the year, in line with expectations and ahead of the comparator period in 2017.

The firm also said it had cash balances at 30 June 2018 of £9.6mln, up from £8.1mln in the same period last year. The company added that it was pleased with trading to date in 2018 and was confident of further progress over the remainder of the year.  Lighthouse will release its half-year results on 4 September 2018.

Fri, 20 Jul 2018 07:40:00 +0100
<![CDATA[News - Growing affinity helps Lighthouse to shine ]]> Affinity relationships with some of the UK’s largest trades unions are generating plenty of momentum for wealth management group, Lighthouse PLC (LON:LGT).

Through 21 affinity connections, almost three-quarters of the UK’s union members are potential customers says Malcolm Streatfield, chief executive, who believes Lighthouse has only scratched the surface of the opportunity.

WATCH: Lighthouse Group 'in a better position than ever' with strong growth in revenues and earnings

Lighthouse gets involved when a company (or other entity) undergoes a restructuring, a person is coming up to retirement or when general financial advice is required.

The union will step in and recommend Lighthouse as its preferred financial adviser.

At that point, an interview will be arranged or if it’s a group arrangement, meetings will be set up.

Last year, for example, Lighthouse carried out 1,100 seminars and surgeries in the workplace at which it presented to 15,000 people.

The conversion rate was impressive, with one–in –three signing up as Lighthouse clients.

Good advice

Results like that have meant affinity business has become a very large part of what the company does, but this has not been an easy space to be in over the past six months.

Headlines surrounding Port Talbot steel workers being targeted by unscrupulous salesmen following a restructuring of their long-standing work pension scheme reverberated across the whole sector.

Lighthouse did very little work at Port Talbot, says Streatfield, but where it did work with British Steel workers during its restructuring, the vast majority of its advice was to stay put with the existing pension scheme.

“If advice is delivered properly, ethically and professionally there should be no issues.

“If we think a [pension] transfer is appropriate we say so, while if someone should stay put, that’s the advice.”

Streatfield says a fee should be agreed at the start and after that the advice process should run its course.

Pensions account for much of the business, but Lighthouse also arranged more than £1bn in mortgages over the past twelve months as well as advising on savings, investments and asset building.

Risk profiling

Technology is important but is more a back-end option for the company. Face-to-face financial advice from an adviser is still the preferred option.

This involves risk profiling – to establish accurately a person’s attitude to risk, especially with people on modest incomes.

“We really don’t want to put forward a recommendation that will put assets at risk.

“We use a psychometric test process to establish the level of risk a person is prepared to take and apply the same structure to the product recommended.”

Bitcoin is a no-no, for example, he says, as are people who refuse to follow Lighthouse’s advice.

Ideally, an annual, ongoing fee is agreed so over time Lighthouse can keep an eye on changes to an individual’s circumstances and how these affect a person’s investment outlook. Half of group revenues are now recurring.

New funds

Lighthouse also has a high net worth advisory arm, Carwood, that is based in accountancy offices dotted around the country.

A fledgling fund management business is also getting underway and has attracted £40mln so far spread among five funds.

Streatfield says each fund needs to have about £20mln invested before they start to make a profit contribution, but adds the fund management operation is a marathon, not a sprint.

It is focused on what Streatfield calls ‘Middle Britain’ and again sticks to a series of very tightly defined risk parameters.

Lighthouse still has an IFA network, though this is a legacy business and going forward affinity will very much be the focus.

Affinity growing

Shares have been rising strongly as the market has started to appreciate the performance of the affinity business.

New business from affinity relationships rose 79% to £5.2mln in 2017 with total revenues from affinity relationships up 41% to £9.6mln (£6.8mln).

That was out of total revenues of £54mln but they accounted for all of the sales growth.

Underlying profits rose 27% to £2.8mln and brokers suggest a rise to £3mln in 2018, which looks very achievable. 

“We saw 15,000 people without too much of a stretch last year and will do same again this year, but we can do a lot do more than that if we wanted to,” said Streatfield.

At 23.2p, Lighthouse is valued at about £30mln.

Fri, 09 Mar 2018 10:24:00 +0000
<![CDATA[Media files - LightHouse Group 'in a better position than ever' with strong growth in revenues and earnings ]]> Fri, 23 Feb 2018 10:25:00 +0000 <![CDATA[News - Lighthouse Group says current trading in line with expectations, expects higher IFA revenues ]]> Shares in Lighthouse Group (AIM: LGT) were in demand this morning after the financial advice and wealth management firm released its interim results, saying it had traded “at least in line with expectations” since June due to improvements in share prices and the impact of sustained low interest rates.

The group said revenues for the six months to 30 June rose to £29.3 million, up from £25.5 million in H1 2008, while pre-tax profits plunged to £56,000 from £442,000, driving down earnings per share to 0.05 pence from 0.37 pence. The growth was primarily due to the merger with Sumus completed in May 2008 and the acquisition of Godfrey Pearson in January this year as like-for-like revenues, profits and EBITDA (earnings before interest, taxes, depreciation and amortisation) slid 21%, 13% and 45% respectively.

The merger and the acquisition also led to an increase of £1 million in operating costs, which would otherwise have been down £0.9 million and caused the depreciation and amortisation charges to rise to £456,000 from £275,000. The amortisation charge and the impact of near zero interest rates also were the main reasons behind the substantial decrease in profits.

The group said that while it was difficult to conduct acquisitions of quality businesses on “reasonable terms,” organic growth through recruitment was progressing well with the number of advisers increasing to 887 compared to 784 at the end of 2008.

Lighthouse has been trading in line with expectations since June, anticipating further improvement in IFA (independent financial advice) revenues, which are benefitting from the impact of sustained low rates and a recovery in share prices with no further weakness expected.

The group added 5% in early trade following the release of the report.

Mon, 21 Sep 2009 10:40:00 +0100
<![CDATA[News - Lighthouse Group sees limited growth in 2009, but well placed with strong balance sheet ]]> Independent Financial Advice and Wealth Management specialist, Lighthouse Group (AIM:LGT) reported a rise in group revenues, but a sharp drop in like for like revenues as the UK’s credit crunch continued to curtail growth in the financial services industry.

Shares in Lighthouse Group fell after the company reported preliminary results for the year ended 31 December 2008.  Total group revenues climbed to £1.5 million to £54.4 million, but the figure was massaged by the contribution from Sumus Plc, which merged with Lighthouse Group in May 2008. Stripping out the acquisition, like for like sales fell 26%. 

Lighthouse also reported impairment charges of £9 million which pushed the company to a pre-tax loss of £8.5 million. Earnings before interest, tax, depreciation and amortisation (‘EBITDA’) fell to £0.55 million (2007: £2.46 million). The final dividend was also cut, but the company said that it was hoping to reinstate the dividend policy at its interim results.

On a more positive note, Lighthouse Group ended the year with approximately £12 million in cash and zero debt, and reiterated that its strong balance sheet put it in a stronger position that many of its peers.
Looking ahead to the rest of 2009, the Independent Financial Advisor reported that it continues to trade profitably and generate surplus cash.  Revenues are expected to relatively flat in the current financial year.

Mon, 06 Apr 2009 11:13:00 +0100
<![CDATA[News - Lighthouse Group – a beacon in a sea of IFAs ]]> Amid the current turmoil surrounding the Credit Crunch plenty of investors have got their fingers burned after mistakenly believing that shares in financial services companies, particularly banks, could not get any cheaper. Indeed, a golfing friend of mine got a particularly sick feeling in his stomach recently after learning of Bradford & Bingley’s nationalisation just a week after buying shares in the bank (his first foray into the stock market as it happens).

However, in certain other areas of the financial services industry the Credit Crunch is creating opportunities for both sector participants and their investors.

Take the IFA (independent financial adviser) sector, for example. Yes, thousands of jobs in this sector are at risk as hundreds of IFA firms themselves have perilously high levels of debt (source: Plimsoll), but this also represents a chance for those few profitable, well-capitalised IFA firms to pick up bargains among rival businesses in order to grow much bigger in the longer term. We think Lighthouse Group is one such firm.

Lighthouse Group is a financial services business that has been quoted on London’s Alternative Investment Market since 2000. In May this year Lighthouse completed its merger with another AIM-quoted financial services business, Sumus, making the group the largest quoted independent supplier of financial advice and wealth management services in the UK.

The group’s core activities comprise the provision of services to IFAs and pension scheme administrators throughout the UK. The services are delivered through a number of divisions that cater for networked IFAs, employed IFAs and self-employed IFAs.

For example, LighthouseCarrwood – which generated £6 million of the group’s £52.9 million turnover last year – is a division that is made up of salaried advisers whose clients are accountancy practices. Meanwhile, LighthouseTemple (£11 million turnover) is a branded IFA business, which owns the clients and any income deriving from them in spite of its advisers all being self-employed.

LighthouseXpress – the group’s biggest division by revenue (£28 million of turnover) – services networked IFAs. These are several hundred advisers, each operating under their own brand as sole traders, partnerships or limited companies. The group provides regulatory cover, professional indemnity insurance and collects income due on their behalf.

The thinking behind the merger of Lighthouse and Sumus lay in both management teams’ view that the respective firms had complementary activities. For instance, Sumus brought two new businesses to Lighthouse: Falcon Group and Financial Services Advice and Support (FSAS).

Falcon Group (turnover in 2007: £15 million) has more than 130 advisers who supply financial advice to both companies and high net worth individuals. Its corporate financial planning function helps firms with employee benefits such as staff pension schemes and medical insurance.

FSAS is geographically focused on Scotland. Headquartered in Dunfermline, it is one of Scotland’s leading IFA networks with more than 160 IFAs and, at the time of Sumus’s acquisition, it had approximately 60,000 clients and around £700 million of assets under advice.

In a highly fragmented industry the enlarged Lighthouse Group now comprises 870 IFAs, representing 3% of the UK’s IFA profession or 2% of this country’s retail financial services sector by Annual Premium Income (API). This scale of course gives it advantages over rival IFA businesses in terms of profits and margins thanks to the spreading of central costs over a broader business base, but Lighthouse has also gained enhanced strength and depth in its advisory, investment and business development teams as well as enhanced distribution opportunities.

According to Lighthouse’s management the merger with Sumus has already realised annualised cost savings of £1 million, the full benefit of which will now flow through into 2009. This has been achieved through the early integration of the two firms’ financial reporting, IT, human resources and senior executive functions.

Meanwhile a further £1 million of cost savings has been identified, which should start to have an effect on the group’s figures in 2009/10.

Of course, Lighthouse’s business has suffered as the economic and investment background has become more challenging. Even during the group’s first half, which having ended on 30 June benefited from a couple of months of contributions from Sumus, revenues declined to £25.5 million (from £26.6 million in H1 2007) while pre-tax profits were 44.3% smaller at £442,000.

But despite this, the group is still profitable and generating strong cash flow. And it is has adopted a defensive strategy in that it is focusing on growing the proportion of its turnover that comes from recurring revenues by continuing to develop long-term relationships with its clients. In the first half, recurring income increased by roughly 20% to £4.9 million.

As a result of weaker trading conditions since the second quarter, at the end of September Lighthouse’s broker Shore Capital reduced its expectations for the group. Accordingly, pre-tax forecasts for 2008, 2009 and 2010 have been reduced to £0.4 million, £1.9 million and £2.6 million from previous estimates of £1.5 million, £3.2 million and £4.5 million respectively. The new estimates translate to earnings per share of 0.66p, 1.5p and 1.86p for 2008 through to 2010.

Consequently, the group’s shares have fallen and they now trade for approximately 12p each after having been over 20p at the start of September.

Although Lighthouse’s management does not expect any recovery in the short term, it does aim to take advantage of the fact that it is a well-capitalised firm in a sector that is currently poorly capitalised. With cash on the balance sheet of more than £12 million, and a team that is experienced in acquisitions and integration, the group sees itself as a consolidator in the IFA sector and it is well positioned to take advantage of further acquisition opportunities that may soon occur.

Certainly, Lighthouse’s directors appear to be upbeat after having bought 1,075,000 shares between them in October and November at prices of between 10 and 10.25p each. Another positive was the introduction of a maiden dividend (0.2p per share) after the interim results.

For potential investors, Lighthouse represents an interesting case. No doubt, the emergence of the Credit Crunch and its knock-on effect on individuals’ assets is having, and will continue to have, a detrimental impact on wealth management businesses and advisers, but for a firm like Lighthouse – which is cash generative, cash rich and sizeable in comparison with its peers – there is an opportunity to emerge from the current financial crisis as a much stronger entity.

Mon, 24 Nov 2008 12:47:00 +0000
<![CDATA[News - Lighthouse Group adds Seven Investment Management to its Capital Programme ]]>
The Lighthouse Capital Programme was created to allow the Company's advisers an 'end-to-end' investment process and more flexibility over funds under advice.  The programme essentially focuses on matching a client's risk tolerance and investment goals to their fund investment options.

Seven Investment Management recently launched the Asset Allocated Passive Fund range which will join the Lighthouse Capital Programme.

Allan Rosengren, Joint Chief Executive of Lighthouse Group plc, said:

"As part of the LighthouseCapital programme we already offer a range of unfettered fund of funds provided by F&C and LV= Asset Management. The addition of the 7IM Asset Allocated Passive fund range, with their highly competitive charging structure and intelligent use of Exchange Traded Funds, further enhances the wide range of investments which our advisers can offer clients."

Yesterday, Allan Rosengren and Alex Scott-Barret acquired a cumulative 795,000 shares in Lighthouse Group at 10 pence per share.

The Company also reported interim results recently for the six months ended June 30. Highlights included cash balances of £12.3 million, total funds under advice up 12% to 6.3 billion and a maiden dividend of 0.2 pence per share.

Wed, 22 Oct 2008 12:27:00 +0100
<![CDATA[News - Lighthouse brings Independent financial advice to AIM ]]> Shares in Lighthouse Group (?Lighthouse?) rallied last week, spurred on by robust full year results for the period ending 31 December 2006. Lighthouse is predominantly in the business of selling financial products through approximately 500 Independent Financial Advisors (IFA?s) - and business is good.

IFA?s are a pivotal part of the UK savings, pension and investment industries, and millions of people seek advice every year. The number of people seeking advice is expected to continue to rise strongly too, as regulations by the government continue to favour guidelines whereby individuals become more responsible for their own future. This is abundantly clear in the creation of various savings products by the Chancellor of the Exchequer over the years; from Individual Savings Accounts (ISA?s) to Self Invested Pension Plans (SIPP's) and even more recently, the allowance for retail investors to invest in ? funds of hedge funds?- something that many people fear is a step too far.

Regardless, all of these new investment products aimed at encouraging UK society to invest and save more for the future means business is booming in the IFA sector. Interestingly, most individuals probably don?t realise that IFA?s receive a commission on advice they give to their clients. The current model usually involves a one-off incentive. However, the FSA recently launched a ?Retail Distribution Review? looking into how the current model could be enhanced. It is widely believed that the government will move towards a more ?life of product? incentive scheme, where incentives will be linked to advice and service provided over time rather than a one off fee. This is clearly in line with government policy over the last decade, and once again will move emphasis of planning for the future over to the private sector. This has helped Lighthouse increase its turnover to record levels in 2006 and should help it continue to do so in the future.

Group revenues for the year ended 31 December 2006 increased by 45% to £47.2 million (2005:£32.6m). Half of this increase is attributable to the acquisition of Carrwood during the last financial year. Gross Profit increased by 82% (22% if you remove Carrwood) to £15.7 million (2005:£8.6 million) and Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) rose to £2.3 million (2005:£450,000). Again, the bulk of the increase was driven by cost savings squeezed out of the integration of Carrwood; nonetheless, the strong earnings performance allowed the group to increase cash balances by 33% to £6.8 million. With no debt or recurring charges on the balance sheet, Lighthouse looks to be in very good shape. Group recurring revenues also rose sharply to £6.6 million in 2006 compared to £3.8 million in 2005. The only blot on Lighthouse?s results was a one off exceptional charge of £1.5 million relating to FRS 20 accounting rules surrounding the company's employee benefit trust ? classified by the company as ?optically irritating? to an otherwise flawless year.

Lighthouse has five main operating divisions:

Lighthouse Carrwood- salaried adviser division - was created post Carrwood acquisition. The division comprises of 40 advisers and managers who have 80 formal introductory agreements in place through accountancy firms. Lighthouse Carrwood provides administrative and ?paraplanning? to its advisers to enable them to focus on advice. (Paraplanners do back-office administration - preparing plans and reports etc - for financial planners.)

Lighthouse Temple is a national IFA operation. The company owns the trading brand, clients and all income derived from the division. The group has 148 advisers and a further 9 about to join.

Lighthouse Wealth focuses on high net worth clients, offering research, advice and sophisticated investments through 40 advisers.

Lighthouse Xpress focuses on a ?network? of 280 independent advisers and provides indemnity insurance, regulatory cover and collects income for these advisors.

Lighthouse Group Benefits administers 400 active pension schemes, 115 group risk schemes and 100 group health schemes.

The spread of IFA?s divisions gives Lighthouse good exposure to the entire breadth of the industry, and also shields it from being too reliant on one particular niche sector of the IFA market ? a fact not lost on Liverpool Victoria Friendly Society Limited (LV), the UK's largest friendly society, which has just entered into a strategic arrangement with Lighthouse. Under the agreement Lighthouse have exclusive access to provide IFA advice to groups that LV has associations with, including 10 of the UK?s largest unions which have 5 million members. The arrangement will add £1 million in recurring revenues per annum to Lighthouse. Lighthouse has issued approximately 4.17 million shares to LV which represents 4.99% of the issued capital, and LV has also subscribed to an additional 5% stake in Lighthouse at 25 pence per share which will raise £1 million, boosting Lighthouse?s cash balances to nearly £8 million.

Lighthouse is well funded and operating in a growing market ? is it possible that the UK's largest friendly society might want to be more than chums? It?s corny I know ?but keep an eye out for lighthouse.

Fri, 06 Apr 2007 00:00:00 +0100