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Lighthouse Group reports loss of £8.5m

Lighthouse Group has reported a loss of £8.5m in 2008, down from a profit of £1.9m the previous year, mainly due to the re-evaluation of businesses it acquired during the year.

The group paid an impairment charge of £7.6m, £5.6m for Sumus assets and £2m in goodwill for other acquisitions made during the year.

Lighthouse group finance director Peter Smith says: “The impairment charge reflects the difference between the value placed on a business when you merge or buy it and the value of the capital that can be attributed to it when you come to year-end evaluations.

“It is inevitable in this climate that there has been a fairly sharp markdown because the view of the business, particularly over the next couple of years, will have reduced compared to where we were six to nine months ago.”

Lighthouse Group executive chairman David Hickey insists that the Group remains profitable at the trading level.

He says: “The 2008 figures were hit by a one-off impairment charge which has no effect on cash or trading levels.”

The Group has reported an increase in revenues of £1.5m to £54.4m for 2008, thanks to its merger with Sumus which brought £15.3m to the group between May and December.

A like-for-like comparison with 2007’s figures, excluding Sumus, shows a £13.8m, or 26 per cent drop in revenues.

Lighthouse has included a prior year adjustment of £1.5m due to misstatements in the accounting for Carrwood Barker Holdings Limited, which it acquired in December 2005.

The misstatements arose prior to, and during, the migration of its customer and commissions data in August 2006 onto a new commissions system operated by Lighthouse.

As a result the cumulative retained earnings and total equity attributable to the equity holders of the Group was overstated by £1,468,364 as at 1 January 2007 and 31 December 2007. Trade and other receivables and total assets were also overstated by £161,159 and trade and other payables and total liabilities were understated by £1,307,205 at those dates.

Lighthouse says there was no effect on the Group’s previously reported cash flows, nor on the financial results of the Group for 2007 or 2008.

Hickey adds: “The Group has performed well against the challenging economic backdrop. We went into the recession in a strong financial position, with significant cash resources and no bank debt. During the period we have focused on the integration of Sumus, which is on target, as well as improving the quality of earnings by increasing the recurring revenues as a proportion of total revenues.

“We are pursuing both organic growth through the recruitment of advisers, as well as continuing to assess acquisition opportunities. The Board is confident that the Group is well positioned for the coming year and the challenges that the industry as a whole will face, and to capitalise on the upturn when it occurs.”

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