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.