National advisory business Lighthouse Group has posted another year of losses in 2013 after restructuring costs and an additional redress bill arising out of a past business review wiped out a modest operating profit.
According to preliminary annual results published today (25 March), a reduction in adviser head count of some 17 per cent post-Retail Distribution Review hit group revenues, which fell 13 per cent to £48m. Income has now declined close to 21 per cent since the £60.4m recorded for 2011.
Furthermore, a £1.2m investment into Lighthouse Financial Advice boosted operating costs from by £1.2m to £14.8m, leaving a pre-tax profit of just £215,000 from operating profits that remained steady at around £15m.
The group was also hit with non-recurring expenses of £1.7m, including a £1.4m restructuring bill and a £310,000 provision for redress uncovered by a past business review. This is in addition to a previous relating to Arch Cru claims, which the group said remains “adequate”.
Overall losses stood at £1.6m, after taking account of depreciation and amortisation costs, as well as a £400,000 gain following the sale of Lighthouse’s 50.1 per cent stake in Bristol-based wealth management firm Deverill Black & Co to Towry for £501,000.
Despite the bleak profit and revenue figures, Lighthouse pointed to further average revenue production per adviser of 3 per cent to £82,000, building on gains registered in 2012.
The group hailed the improvement as a “considerable achievement” in a post-RDR world, coming as it did against expectations of double-digit percentage declines. Recurring revenues increased to 34 per cent of total group revenues in comparison with 32 per cent in 2012.
Losses were also considerably reduced compared to 2012, when the firm posted a hit of £4.6m after an impairment charge of £3.9m.
Lighthouse’s preliminary results for last year stated the shake-up of the business announced in September had helped the IFA’s balance sheet.
In September the group announced plans to close its administrative “back office centre” in Exeter following the completion of a strategic review.
The group, which consists of several operating subsidiaries including generalist national IFA firm Lighthouse Financial Advice and network Lighthouse Advisory Services, said it had conducted a review that focused on the “optimum locations” in relation to its principal business units and the remaining time on leases at its various offices.
It said the result was that it will seek to close its office in Exeter, subject to final Board approval and following a “collective consultation process with employee representatives. The office would be closed prior to the end of March 2014, it said.
Richard Last, chairman of Lighthouse Group, said: “The group has made substantive progress during 2013, a year which saw considerable market and regulatory change.
“The group has continued to invest in its LFA business which is now better placed to fully capitalise on the affinity relationships that it has secured.
“The increase in average annualised revenue per adviser and in percentage gross margins achieved are very positive and bode well for future trading.
“The restructuring we announced in September 2013 is expected to deliver significant operational gains and cost savings by mid 2014 and provides a solid platform for future growth.”
“With a strong cash balance, operational scale and a robust business model, Lighthouse is well positioned within the industry to deliver future growth.”
Lighthouse is the latest national adviser firm to record mounting redress charges on the back of a past business review, after Sesame Bankhall last week revealed losses had doubled in 2013 on the back of the Sesame network’s own review of historic sales.
Parent company Friends Life stated the advisory business had posted a full year loss of £19m for 2013 as it was forced to set up a provision following a review of past business including pensions transfers.
