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Network seeks investors after posting £106k pre-tax loss

by: Carmen Reichman
  • 16/01/2015
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Network seeks investors after posting £106k pre-tax loss
Adviser network Financial Ltd is looking for investment to secure the future of the business after pre-tax losses more than doubled in the year ending March 2014, latest results have shown.

The directors of the network said in its latest accounts they were “in discussion with a third party over a potential investment into the group” after admitting cashflow requirements and a recent regulatory recruitment ban cast doubt about the company’s ability to continue trading.

Financial’s auditors Nexia Smith & Williamson warned the firm may not be able to continue to operate if it does not secure an investment that will “satisfy its commercial and regulatory capital requirements”.

The network was subjected to a landmark recruitment ban of four and a half months by the regulator in July 2014 after it found the firm had failed to adequately supervise its advisers.

The regulator said it would have fined the network more than £12.5m had it not been for its financial position.

The network’s accounts, published on Companies House on 14 January, state Financial hit revenues of £35.3m during the year, but posted a pre-tax loss of £105,500.

In the year before, Financial – a subsidiary of the Standard Financial Group – reported a £49,000 loss on revenues of £30.8m.

The network’s directors blamed a “write-off of goodwill” for the 2014 losses but admitted it had faced “challenging market conditions in a post-Retail Distribution Review environment” as its clients were coming to terms with fee charging.

The company set aside £2.8m for covering client complaints, down from £3.3m in 2013. It said it believed it will recover almost £2m from its members and insurers.

Director Brian Galvin said the network was taking “serious steps” to address concerns about the its future in a business update for advisers in October.

He said: “In a year with such a high level of external scrutiny to record a [group trading] profit of £183,000, increase our cash position and at the same time reduce the amount held for provisions was excellent.

“Yes, we did write off some goodwill and that means a paper loss but this has no impact on our trading position or capital base.

“This year is looking harder as the recruitment freeze impacts but we are taking some serious steps to address this and new members are in the pipeline for next month.”

Galvin did not comment on the firm’s progress with finding investors.


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