Cofunds defies crash to make its first profit

Cofunds has broken into profitability for the first time posting an £0.5 million pre-tax profit in 2008. 

The platform provider, whose leading shareholder is Legal & General, has been loss making since 2001 and previously recorded a £12 million loss in 2007 and a £14 million deficit in 2006.

Despite a terrible year for stock markets Cofunds saw assets under administration edge up to £14.6 billion last year from £14.4 billion at the end of 2007.

'Against a backdrop of unprecedented market turbulence and increased competition in the platform space, Cofunds had a hugely successful 2008,’ said Brett Williams (pictured), Cofunds chief executive, who joined from Skandia-owned rival Selestia last July.  

The pre-tax profit would have been £4.1 million but for a £3.6 million cost of the executive long-term incentive plan. The results show operating losses improved to £1.15 million from £15.8 million as Cofunds slashed its administration bill from £53 million to £40.7 million on turnover of £39.5 million, up from £37.2 million the previous year. Finally, interest of £5.4 million helped pushed the accounts into the black.

Williams credited high levels of new business and the growth of Cofunds institutional business for the firm's move into profits. He predicted the platform market would be shaken up in 2009 with niche providers struggling to sustain investment and life companies putting the squeeze on subsidiary wraps.