Revenue boost for financial adviser

The London-based group said revenues for the six months to June 2010 were 32.6m, up from 29.3m last year, while pre-tax profits were 117,000, up from 56,000.

The group owns the financial adviser formerly known as Godfrey Pearson, which provides advice to about 30,000 professionals in Yorkshire.

David Hickey, group executive chairman, said: "Trading progressed steadily during the period. The proportion of recurring revenues now exceeds 25 per cent of the total and continues to rise, and the group's operations continue to generate cash.

"The balance sheet is extremely strong with substantial cash deposits. With financial strength becoming a key differentiator in this industry, the board remains confident of further progress during the remainder of the year and beyond."

Lighthouse Group has cash balances of 12.3m at the period end, plus 1.85m from the sale, in August, of its pensions administration business, City Trustees.

Shares closed last night at 8.8p, giving the group a market capitalisation of 11.2m.

A note from house broker Shore Cap said: "We view the shares as materially undervalued, given the strength of its balance sheet and its positioning in the intermediary market."

Allan Rosengren, joint chief executive, described the half-year performance as "very positive" and said the 8.6m in recurring income "provided an underpin" for the business, reflecting long-term business relationships.

He said under-capitalised financial advisory firms are finding it difficult to grow and will continue to struggle following the retail distribution review, due to come into effect in 2013.

"Those that are not sufficiently well capitalised are on the back foot at this stage," he added.

Lighthouse said it expected to see a reduction in the number of advisers across the industry, while the increase in capital adequacy requirements would challenge the existence of many firms.

The review will also lead to a reduction in remuneration for individual advisers, it added.

Mr Hickey, the chairman, said the group's "scale and financial strength differentiates it from most stand-alone organisations in the sector" and has traded at least in line with expectations since June.

Lighthouse provides financial advice on matters including employee benefits, medical insurance, pensions, retirement planning and redundancy counselling to about 500,000 people in the UK. It has affinity relationships with organisations such as Royal Mint and Unison that require financial advice for employees and members.

Lighthouse GP, previously known as Godfrey Pearson, provides advice to professionals such as doctors, dentists, vets and teachers and was bought by the group in early 2009 for 1.9m.

Mr Rosengren said the business was "doing all right" and

has taken on more advisers, boosting numbers to 56 at its base at Harewood House, near Leeds.

Asked about the group's plans for the next six months, he said: "Maintaining our very strong capital position and sustaining the business going forward.

"We are on a very strong foundation to expand and gain advantage from current market conditions. We have capacity in our offices to take on additional advisers.

"Continued expansion will be the primary focus."

Slow economic revival forecast

Financial adviser Lighthouse Group has seen a gradual pick-up in the general economy over the last 18 months.

Allan Rosengren, joint chief executive, said: "So long as the shake-out in the public sector is not too dramatic then, hopefully, the economy continues to gradually

improve, but it is a slow-running position at the moment. Certainly not a fast recovery evident so far."

In July, the group was appointed by Unison, the largest public sector trade union, to supply financial advice to its members.

Asked about the mood of Unison members, many of whom face spending cuts, Mr Rosengren said: "They will have to speak for themselves, but the mood is one of appreciating that things are going to get a bit tougher in that sector. That's inevitable."