Skandia's platform reports £11m pre-tax loss for 2011
Skandia Investment Solutions posted a pre-tax loss of £11.4m during 2011 as the platform was forced to absorb RDR-related costs.
The figure is an improvement on 2010, when the platform recorded a pre-tax loss of £15m. Skandia’s parent company Old Mutual pumped £29m into SIS during 2011, down from £52.5m in the previous year.
Taking into account a policyholder tax credit of £16.9m, the platform made a post-tax profit of £4.1m for 2011.
The Skandia platform comprises Skandia MultiFunds and Skandia MultiFunds Assurance.
In a statement issued in both sets of accounts, Skandia says a combination of investment in IT infrastructure and RDR preparations impacted on the platform’s costs during 2011.
Skandia UK marketing director Nick Dixon says: “The statutory reporting figure post-tax for the Skandia platform shows an overall profit of £4.1m.
“The platform held substantial surplus capital at the end of 2011, and this financial strength has been sustained into 2012. We continue to invest heavily in the development of our platform for the benefit of financial advisers and their customers.”
Dixon says the difference between the pre and post-tax profits figures exists because the revenue the platform reports is depressed by accounting assumptions it makes on tax that needs to be paid on behalf of policyholders who have investment bonds.
As a result, a ‘policyholder tax’ of £16.9m was credited to the SIS accounts in 2011.
Dixon says this “accountancy quirk” will continue to appear in future company accounts.
The Platforum managing director Holly Mackay says: “The ongoing costs of running a platform are substantial. Tax and regulation are always changing and you need to spend a lot just to stand still. I don’t see the costs of running a platform decreasing but of course we do see margin pressure bringing revenues down.
“10 years ago, Skandia only had about three platform competitors. Today there are more than 30 platforms supporting IFAs and it’s a tough environment for everybody.”