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Openwork reverses £13m loss with first-ever profit

by Jun Merrett on Feb 22, 2013 at 11:26

Openwork reverses £13m loss with first-ever profit

Network Openwork has posted its first ever profit reversing the £13 million loss it made in 2011.

The restricted network has announced an unaudited profit of £600,000 for 2012 compared to a pre-tax loss of £13.3 million it made in 2011

The loss in 2011 was in part due to £7 million of exceptional costs incurred through a restructure of the company which saw it reduce staff numbers, retrain remaining staff for the retail distribution review, and change its infrastructure.

In March 2012, Philip Martin, Openwork marketing and propositions director, told New Model Adviser® the network aimed to get out of the red and be profitable within 18 months through lowering its charges to advisers but driving more assets onto its platform and into its funds.

Mary-Anne McIntrye (pictured), chief executive of Openwork said: 'Openwork being profitable for the first time is a hugely significant milestone and is a source of great encouragement for our adviser firms, not only in knowing they are part of a stable network but also of course as shareholders in the business.

'It has been a long journey since Openwork’s launch in 2005 and this marks a turning point in its history as a standalone trading company. We recognise however that 2013 is likely to be extremely challenging and we will continue to use our scale to drive revenue from multiple sources while giving our advisers all the support and tools they need to thrive in difficult market conditions.'

Earlier this week Openwork expanded its distributor-influenced fund (DIF) proposition Omnis Investments by adding four new funds. The network had announced in December 2012 that it would tie its advisers to its DIFs.

16 comments so far. Why not have your say?

Was it worth the revision via mobile

Feb 22, 2013 at 12:32

Interesting does this now mean the LLP will force a sale?

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Bob Donaldson

Feb 22, 2013 at 13:08

It amazes me that the FSA will let a companay trade if it is unprofitable for such a period of time. Someone must have deep pockets.

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Well Now

Feb 22, 2013 at 13:12

@ was it,

No sale, not until FUM exceed £5b, thats not to far away!

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Well Now

Feb 22, 2013 at 13:14

@Bob

Zurich have very deep pockets.

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Ian Lees

Feb 22, 2013 at 14:33

Clearly it is not only the insolvent banks like LloydsTSB and RBS ( The Robbing Bank of Scotland ) - who are allowed under FSA Rules to continue to trade with millions of pounds of losses. I see Scottish Wiodws advert next to this has their " ex Spert "Channel Debate ( I assume it is a TV channel debate, rather than anything " Financial " ) - as Scottish Widows are not authorised and are - introducers to Clerical Medical - also owned by Edinburgh's Nationalised LloydsTSB the Toxic Swindling Bank on Endowments, on pensions on PPI - and now fined by the FSA as being "bad payers", and fined for NOT repaying their swindled customers in ANY reasonable timescale. Try getting a Visa Debit Card out of Paul Springer TSB St Albans ? ? ? four months and running !?!

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Ric Green

Feb 22, 2013 at 14:57

@ Ian Lees - losing money every year does not in itself lead to failing to meet your capital adequacy requirements. I am sure with the all the profits the banks creamed off us all over many, many years means there are plenty of reserves on those balance sheets to support their losses for many years. Now if they ran out of cash...........

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Nick Bamford

Feb 22, 2013 at 15:08

£13.3 m loss in 2001 - £600,000 profit in 2012 means they have lost £12,700,000 it will only be profit once they have made that little lot back!

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Greg M

Feb 22, 2013 at 15:13

...."driving more assets onto its platform and into its funds". What a wonderful new RDR-permitted attitude. Adopt 'restricted' and forget 'best' advice, and then simply 'drive' business wherever it is makes you the most profit.

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vforvendetta

Feb 22, 2013 at 15:19

Congratulations Zurich for allowing your unwanted child a bit of space. Counting the days until the Zurich single-tie is announced though. Poor ascentric/IFDL's platform will be yet another victim of the Z machine.

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Well Now

Feb 22, 2013 at 16:55

@vforvendetta

Your a little out of date, those single tie days are long gone.

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Ian Lees

Feb 23, 2013 at 07:43

Without wishing to be picky, it is only after the lost money is made up that profits may start - after extraordinary expenses - as Harold Wilson once said " the pooond in yir pocket ......" However, the comment on single tie . . . is dead is a distraction from reality. For instance check the " restricted advisers" check insurance company sales forces / consultants, or as introducers to other insurance companies . . . and check their pay structure . . .commissions by any other name as demonstrated in Court against the false and misleading claims of " Equitable Life", Directors . . . when they paid their " appointed representatives " ( for "dissapointed" returns ) commissions . . . to incentivise them . . . to sell their highly charged products. I received oncentive payments as a broker consultant at scottish widows - being remunerated ( rather generously ) for selling direct - in competition with Brokers ( in those days ), and in conjunction with chartered accountants ( for we did not have too many Certified Accountnats in Scotland ) - where managers could remunerate - their introducers ( perhaps keeping some for themselves - for they had total control - with the blessing of Directors of this mutual company ). Now, the leads come from LloydsTSB - as the employees scour clinets savings and payments into this Edinburgh based bank - as owners of the shoddy widows - who are not authorised under FSA - but claim to be " introducers to clerical medical ", but,l on scottish widows headed paper ? How does that work in the FSA's " regulated " environment ? Single ties are here and here to stay becasue the insurance companies have lost solvency - with the loss of new business income - and churning can usually only be effectiive a couple of times before consumers become aware - it usually takes the FSA longer to be aware !?!

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Ian Lees

Feb 23, 2013 at 08:03

@Ric Green - failing to be profitable year after year after year does mean you fail to meet capital adequacy , ( eg scottish widows - insolvent and incapable of manging client money . . . . had to be purchased by Edinburgh bank . . .TSB . . . . Scottish Amicable . . had to be purchased by Prudential . . . Equitable Life . . . nobody wanted their liabilities . . . . un purchasable to date . . . see others Phenix Resolution . . . etc etc., )unless you have awfully deep pockets ? More importantly thousgh is the on going failure and lack of competance of those in charge - needs to be addressed - and if not - reuslts in lack of confidence e.g insurance companies . and loss of confidence in endowments ( and they still provid good value ) - loss of confidence in pensions . . . and they can still provide good value ( if sold correctly ) and loss of confidence in providers -0 who refuse to look after their cusotmers e.g insurance copmaonies and their introducers eg brokers, IFA's tied agents or restricted advisers .

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Dathan Steele

Feb 24, 2013 at 22:32

Amazing that the Life Cos will fund such losses, year on year on year. What wealth destruction for the shareholders. Any business that had to either borrow or input their own directors assets would have shut up shop long ago.

Good job there is an opaque WP fund the background writing the cheques (indirectly, of course!)

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Chartered Mark

Feb 25, 2013 at 07:24

It's a simple matter of creative accountancy. When Openwork was Allied Dunbar, it was amazingly profitable. The charging structure for the plans they sold meant that the provider side of the business made loads of money.

When Openwork was flaoted off as a separate entity, it's business madel was exposed to the real world. Zurich continues to make shed loads of money from the legacy business, and can easily support Openwork's losses at present.

Also trading at a loss and can be a nice tax dodge, as long as the parent supports you.

The reality check will come if Openwork ever severs the ties and Openwork has to sink or swim on it's own. But thet is the same for all distribution models.

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Ian Lees

Feb 25, 2013 at 07:59

@Chartered Mark. . . Openworks . . ."tax dodge" . . a bit like " Star Fcuks ", lots of income from UK citixens and tourists - no UK tax ? Like Gordoin Brown . . .they may pay some in a few years time ? Now that is useful ? for their " barista's " or as we really know them . . . "perky copulators ", ( in wedding speeches). The " coffee experience", add beans to a machine - let it grind them, or add coffee to the machine - fill with water, add cardboard cup , and hand over to a cusotmer . . . clearly you require excessive training for such a technical subject . . . and the purchasing fools have been hood winked into believing this . . . is the coffee experience ? ? ? It is great sales propaganda.

I would think there is great opportunites for tied agents, restricted agents who concentrate on Protection . .to the massive benenfit of their Agency Master, who given the losses of income and lack of TRUST in insurance companies ( mostly held by insolvent banks ) - elements of the remnants of the insurance industry, could start raising themseves out of their ashes ( no pun intended on their cremation . . . or funeral pyres ? )

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Ian Lees

Feb 25, 2013 at 08:28

@Nathan Steele. . opaque charges and abuse of with profits funds by reckless directors - who hav no commitment to their policyholders - and continue uncvallenged by the Board of Directors, the chairman - and auditors. For example I purchased a house in St ALbans with the money form Scottish WIdows With Profits funds - at a discounted rate of interest for employees. This from a " Mutual Company ", and I still do not understand it. Scottish Widows wrote to me when I left the company and asked me to repay their debt, and when I asked them " How much it was?" They said " You should know . . .becuse you borrowed the money ! ", I replied . . .Scottish Widows ( their actuaries and their auditors Price Waterhouse Coopers ) . . . as they had lent the money ! " . . and I sat tight for six years, paying no mortgage on the scottish widows owned property ( although I had to continue paying the mortgage on a property in Fife - a result of failure of Scottish Widows to adhere or accomodate their agreed contract terms - " to take over my house in Fife as part of their desire to move me south to London as part of their agreed move) without notification or interest. This included their " in house", property share ie some 32% of the entire prpoerty price - paid by Scottish Widows. I moved i 1991 - scottish widows took me to the high court in Bristol in 1996 - with no notification of any property purchased , no accounts , no interest . . . but I have always wondered how much the Chief Executive Mike DRoss and the Chairman, Chief Actuary Mr Thomson and the Board may have added to the outstanding debts . . . for their personal, and financial purposes ? Clearly PCI - who do not conduct proper audits - and who I alerted to the Fraud - refused to acknowledge or report.

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