Storm at the Lighthouse
Having just averted a delisting from Aim, Lighthouse shareholders weigh the consequences of their actions.
When Lighthouse Group announced plans to delist from Aim early in July it met a storm of protest.
Many existing shareholders did not want to delist, and trade their shares in an unquoted company, which as listed has had a very weak performance on the stock market.
Led by professional investor Paul Mumford, senior investment manager of Cavendish Asset management, investors staged a revolt, and voted against the delisting.
So Lighthouse remains as a quoted company, with a share price still languishing at under 10p.
Companies such as Millfield, Berkeley Berry Birch and InterAlliance, were all quoted on Aim, but at various points failed
The current valuation, at the time of writing, is 3.86p. With 128m shares in issue, this gives the market valuation of the company at just over £5m. David Hickey, executive chairman of Lighthouse, claims this is far too low.
He said: “Too many people considered that is the value of the business. The mathematics is correct but under no circumstance is Lighthouse worth £5m.”
For the past three years, the company’s revenues have hovered around the £60m mark, and the year before last, the group made a small profit of £1.45m, although last year this was turned into a loss of £2.44m.
Nevertheless, Mr Hickey is upbeat. He said: “The stock market is saying it’s £5m, but the board is confident in saying it’s worth a multiple of that.” In fact so disheartened is the company with the stock market performance, that Mr Hickey claims investor sentiment bears little relation to reality,
He said: “If you’re Facebook, for example, let’s assume you have a business worth £1m, and the stock market is valuing it at £100m, then the right thing to do is to put it on the stock market. It’s in reverse with financial services companies, and with IFA companies.”
Here he said, the stock market values the business at a much lower level.
Mr Hickey said: “If we were unquoted today, would we be looking to quote on the stock market? The answer is, under no circumstances.”
The share price has indeed suffered. The company floated at 180p in 2000. In recent years, it has hovered at around the 20p mark, before sinking below 10p during the financial crisis. Once a company’s value falls below £10m, the shares become much more difficult to trade in any great number, and investors get “stuck in a liquidity trap”, according to Mr Hickey.
The company originally floated to raise capital to invest and expand the business. It was at the time loss-making, but has since grown, not least by merging with Sumus - holding company of Falcon Group - and acquiring Berkeley Wodehouse Associates, Carrwood Group as well as advisers from other businesses that failed. It has more than 200 advisers.
- Lighthouse moves to end speculation over delisting plans
- Draw a line under Lighthouse events: Mumford
- Lighthouse de-listing prompts fear over IFA capital raising