Openwork losses deepen to £13m after RDR investment
Network trades profitably but incurs large costs in RDR investment and writing down “intangibles”.
Adviser network Openwork has posted a £13.3m loss for 2011, with losses increasing by £4.8m year-on-year, in large part due to investment in technology infrastructure and other business changes in preparation for the Retail Distribution Review.
According to Philip Martin, proposition and marketing director for Openwork, the company spent £7m investing in technology for the RDR, restructuring staff and filling new roles. A further £6m cost was due to a re-valuation of certain software and intangibles.
Openwork itself made an underlying operating profit of £1.3m and sister company 2Plan made a £1.6m loss, as was expected when it was first acquired in the summer of 2011.
Commenting on the company’s finances late last year (5 December), Mr Martin made a pledge to turn the company to profit 18 months from then.
Mary-Anne McIntyre, chief executive officer of Openwork, said: “Openwork’s investment in the infrastructure required to deliver first-class support to our advisers in the new regulatory world has been significant and these results are in line with our expectations and planning.
“While the one-off costs associated with the RDR have, in combination with other exceptionals, led to an overall loss for the wider business, it is important to note that Openwork is now trading profitably. Indeed, having taken with these accounts the opportunity to address some legacy IT valuation issues, we believe the business is very well financially positioned for 2013 and beyond.
“Our commitment to investing heavily in Openwork has meant we are, in line with our long-term strategy, able to offer a compelling proposition to any adviser, whether their model is single-tie, multi-tie or whole-of-market.
“The attractiveness of our proposition and our increasingly robust financial position holds clear appeal for advisers seeking a safe and robust home post-RDR and is the ideal springboard towards profitability.”