Lighthouse sees pre-tax profit jump despite FSCS costs

Lighthouse sees pre-tax profit jump despite FSCS costs

Listed intermediary Lighthouse has reported pre-tax profits up by 308 per cent during the first half of this year, despite their Financial Services Compensation Scheme bill increasing 54 per cent.

The firm’s results, published today (14 September), revealed a pre-tax profit of £359,000 for the first half of this year.

The adviser used its latest set of results to highlight the fact it is having “to cope with significant increases in regulatory costs, especially in relation to the funding of the Financial Services Compensation Scheme”.

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Lighthouse’s latest FSCS bill, for the year ending 31 March 2016, represented an increase of £442,000 - or 54 per cent - and bosses said it will, in part, inevitably have to be passed onto customers.

As a result, the group confirmed it is currently examining the proposal by the Financial Conduct Authority to move from a cost-based to a revenue-based approach for calculating a regulated firm’s minimum regulatory capital requirement.

The results for the first half of 2015 also showed that revenues increased by 2.5 per cent on the first half of 2014 to £23.9m from £23.4m.

Meanwhile, the firm stated it is part of the FCA’s Project Innovate arrangements, where alternatives to traditional channels for advice to consumers with relatively low levels of investable funds, are being explored.

The pilot scheme established in the first quarter of 2015 to test the market for direct online advice using a white-labelled version of the Money on Toast software.

Lighthouse said this pilot has now been extended in order to cover a complete annual investment cycle and also to include additional affinity relationships through benefit management specialists Parliament Hill. Results of the pilot will be assessed “in due course”.

Addressing the overall results, Lighthouse Group chairman Richard Last, commented: “Average revenues per adviser have increased further which, together with higher gross margins, has driven a 66 per cent increase in Ebitda to £723,000 and delivered a pre-tax profit of £359,000.

“The group is well placed to meet its market estimate for the full year, notwithstanding recent market fluctuations, and an interim dividend of 0.08 pence per share, a one-third increase on the level in 2014, will be paid on 23 October 2015.

He added: “With a strong balance sheet and net cash reserves of £6.9m the group is well placed to take advantage of the opportunities available to it, particularly in the auto-enrolment and workplace solutions space, whilst dealing with increased regulatory costs and an uncertain general economic outlook.”

Earlier this year listed adviser Lighthouse Group announced it had swung back into profit for 2014, posting a profit before tax of £600,000 compared with a 2013 loss of £1.6m.

Its annual results, posted on 26 February, revealed that average revenue production per adviser increased 5 per cent to £86,000 in 2014.