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Lighthouse reports soaring losses and takes £3.9m network hit
by Jun Merrett on Mar 20, 2013 at 07:54
The national advice group has reported a decline in revenue, from £60 million in 2011 to £55 million in 2012, as adviser numbers dropped. However, 'average adviser production' rose 14% to £87,000 a year.
The group said that based on the impact of reduced adviser numbers and changes in operating methods post retail distribution review (RDR) it had set an impairment charge of £3.9 million against the value of network Lighthouse Advisory Services.
Lighthouse, whose chief executive is Malcolm Streatfield (pictured), was hit by an exodus of more than 100 advisers in the first half of 2012 which was partly due to the RDR’s qualifications demands.
The group also retained a £1.6 million liability provision in 2012 because of ‘substantive issues’ relating to investments such as Arch Cru and has contacted clients with holdings in the funds.
Lighthouse made a £3 million provision in 2011 in relation to historical trading liabilities for IFA networks Falcon and FSAS, which the group wound down as trading entities and combined into its network in early 2011.
‘The non-recurring operating charge in 2011 was made to address the potential liabilities arising out of the historic trading of certain subsidiary companies,' the group said.
‘Significant progress has been made on these matters during the year but the substantive issues remain, in particular those relating to Arch Cru and therefore the residual provision of £1.6 million has been retained,' it added.
‘The board has reviewed the position in light of information currently available and the action now to be taken at behest of the regulator in contacting clients that bought the products involved and has concluded that the provisions retained are appropriate and adequate.’
The group spent over £1.4 million on non-recurring expenses and £900,000 on professional advisory and consultancy costs to prepare for the RDR and also £500,000 on re-organisation and restructuring as well as its failed bid to delist from the AIM market.
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