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Cofunds defiant on tech upgrade costs as profits sink to £73k

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Cofunds has claimed the cost of upgrading its platform technology “won’t be anywhere near” the expenses incurred by rival platforms, as it posts a pre-tax profit of £73,000.

Aegon agreed to acquire Cofunds last month in a deal worth £140m.

Cofunds head of corporate communications Stephen Wynne-Jones says plans to develop the platform are awaiting the Aegon deal to be finalised, which is expected in November.

He says: “The upgrade onto an existing proven and operating platform won’t be anywhere near as significant as other replatforming arrangements, such as Old Mutual Wealth.”

Aegon has budgeted £80m all-in for the tech integration, while Old Mutual Wealth is expected to pay £450m for its replatforming.

Wynne-Jones says: “Our platform will benefit from being upgraded onto the Aegon platform, bringing expanded investment options such as exchange-traded funds, investment trusts and equities, an integrated pension, more online trading and less paper. The priorities of these will be determined by an advisory board that we’re in the process of setting up.”

The platform has published its 2015 results, which saw pre-tax profits drop from £7.7m in 2014 to just £73,000.

Cofunds says the fall in profits was due to the cost of investing in the business, including RDR-related  “adjustments”.

Wynne-Jones says numbers for 2015 have been “disappointing” but adds the firm has been good at controlling costs.

Net cash generated by the business increased by 33 per cent to £5.3m, from £4m in 2014.

An Aegon spokesman says when the deal completes it will share its next plans for the platform.

It says: “Cofunds is the market leader in the platform industry and has a strong franchise.We’re delighted with our new ownership and will share further plans for the integration of the business when the deal formally completes.”

 

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