Lighthouse also announces that it is simultaneously raising approximately £3 million in new ordinary shares from institutional and other investors.
A shareholders circular will be posted later today and will include a Notice of an Extraordinary General Meeting of the Company to be held on 30 November 2005.
Highlights
Carrwood Barker
*Carrwood Barker was founded some 13 years ago and currently employs over 40 IFAs. The average annual turnover of the Carrwood IFAs is in excess of £160,000. Carrwood Barker has introducer arrangements with approximately 100 firms of chartered accountants and solicitors across the UK and most of Carrwood Barker’s advisers are physically based in many of these firms.
*Carrwood Barker annual revenues are currently approximately £8 million. Of this, approximately £2.8 million is recurring, being derived from renewal income, recurring fees and income from funds under management.
*As part of the transaction, Lighthouse will also acquire ownership of City Pensions Limited, which is a SIPP and SSAS business administering 1,000 SIPPs and SASSs, with an aggregate funds value of approximately £260 million.
Terms of the acquisition
*Lighthouse will acquire the entire issued share capital of Carrwood Barker for an initial consideration of approximately £3.3 million, payable (as to all bar approximately £100,000 which is in cash) in new Lighthouse shares. In addition, deferred consideration of up to £1.2 million is payable in two tranches in the event that turnover of Carrwood Barker is not less than £9.5 million in the calendar year 2006, and £5.5 million in the six months to 30 June 2007.
*At completion, John Stevenson, the principal founder of Carrwood Barker, will join the Board of Lighthouse as an executive director.
Fund Raising
Lighthouse has conditionally raised approximately £3.1 million through a placing of new ordinary shares, of which £2.3 million is from institutional and other investors, and the balance is from certain Carrwood Barker guarantors, all at a price of 13.5 pence per share. The funds raised will be used:
*to finance the repayment of existing Carrwood Barker indebtedness;
*to pay the expenses of the transaction;
*to pay expected integration costs; and
*to increase the working capital of the Enlarged Group.
At completion, the enlarged Lighthouse group is expected to have approximately £3 million in cash, with no debt.
Lighthouse chairman David Hickey commented: “Carrwood Barker has an excellent market position, through its business relationships with a significant number of firms of chartered accountants throughout the UK. Like Lighthouse, it has a strong compliance culture, derived in part from using only seasoned advisers skilled in providing independent advice to corporate and personal clients. The provision of IFA advice alongside accountancy firms is an ambition that many have attempted in the IFA sector, but at which John Stevenson and his team have been particularly successful. Accordingly I am delighted to welcome John to the Lighthouse Board.
"The recurring annual income from Carrwood Barker comprises over 85 percent of the initial share consideration payable and increases the predictability of the enlarged Group’s turnover. When added to the significant cost savings expected from the transaction, and in light of the strong recent interim results published by Lighthouse, this transaction reinforces the Board’s expectation of continued financial progress for Lighthouse.“
