Lighthouse stung by revenue drop and Brexit uncertainty

Lighthouse Group dropped on Tuesday after reporting a drop in revenue and concerns over "a measure of uncertainty" within the UK retail financial services market.

For the year ended 31 December the UK-wide financial advisory group reported revenue of £53.4m, down 1% compared to the year before.

This was offset by a 2% drop in cost of sales to £38.8m and a 2% cut in admin costs to £11.9m which resulted in profit before tax increasing by 5% to £2.6m.

Chairman Richard Last said: "Lighthouse has continued to progress its strategy in 2018 despite softening market conditions in the second half of the year and has delivered an excellent set of results alongside a number of strategic initiatives."

Despite the drop in overall revenue, recurring revenues increased by 10% to £26.8m, now making up 53% of total revenue generated from customers which the AIM traded company said will help the business deal with cost pressures.

"The substantial rise in recurring revenues together with maintenance of the record average annualised revenue per adviser, along with a reduction in operating costs flowing from the group's continuing focus on providing good customer outcomes, resulted in a further increase in earnings," said Last, adding that Lighthouse was "well positioned" to deliver further growth.

There remains a focus on improving operational efficiency as Brexit, together with the corrections in UK and global financial markets in recent months, has created uncertainty within the retail financial services market in the UK, while increased regulation and market uncertainties will mean upward pressure on costs.

Cash and cash equivalents stood at £9.5m at the end of the period, up from £8.7m at the same point the year before, while a final dividend of 0.5p per share brought the total dividend for the year up to 0.7p per share, up 67% on the year before.

Lighthouse Group's shares were down 1.88% at 26.10p at 0937 GMT.