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Platforms stoic in face of tech provider share price plunge

Aegon/Cofunds, Alliance Trust Savings, Novia and AJ Bell use GBST technology for their platforms

Technology-Binary-Data-Tech-Code-700.jpgPlatforms using GBST are unperturbed by a recent market update from the technology provider that outlined issues with development plans and led to its share price plunging.

Between 18 August and 25 August, Australian Stock Exchange-listed GBST has seen a share price decline of 48 per cent.

The drop occurred after a market update on 21 August showed earnings fell from AUD$20m (£12.3m) in 2016 to $12.2m in 2017.

GBST says earnings were impacted by increased spend on upgrading its software platforms, including Composer, which is the system behind the Aegon/Cofunds, Alliance Trust Savings, Novia and AJ Bell platforms. Research and development costs increased by 169 per cent in 2017 to $9.6m.

The statement says total revenue dropped 19 per cent because of “client-related project delays” and the decline of Sterling against the Australian dollar.

The company will spend up to $50m over the next three years on transforming its Composer platform and developing a new “digital front-end” product, called ComposerWeb 2.0. In 2018, the cost is expected to be between $10m and $12m.

GBST admits it has run into difficulty with the development project on Composer.

The market update says: “Our development programme is having to overcome a number of challenges, particularly related to the automated migration of code by a third-party vendor. These challenges will impact the timing and implementation of the project.”

GBST has now decided to do most of the migration and development itself. It is re-planning the project, which it expects to take two months.

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GBST chief executive Rob DeDominicis says in the update that the project will not impact existing clients’ current operations or their business plans.

Indeed, platforms using GBST technology are unconcerned by issues at the software firm.

An Aegon spokesman says: “GBST is a long-term partner and we’re on track and on budget with our integration project.”

An AJ Bell spokeswoman added that it is not concerned and further investment in the technology would be expected.

Novia chief executive Bill Vasilieff says: “The fall in profits is money they are putting into future developments so it does not affect us in any way at present. We are extremely happy with Composer and the service they give us.”

Vasilieff says Novia has not been affected by issues with the third party vender on the Composer development project.

Alliance Trust Savings chief executive Patrick Mill says: “We have a strong collaborative relationship with GBST and we’re fully supportive of their development plans.”

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The market update says of the UK market: “Major projects in the UK are progressing and GBST is working closely with clients to maximise opportunities made possible through Composer.”



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