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Tilney posts £9.5m loss as compliance and staff costs escalate

Tilney Group posted a £9.5 million pre-tax loss in the year to December 2017, despite generating an eye watering £226.5 million revenue.

Tilney posts £9.5m loss as compliance and staff costs escalate

Tilney Group posted a £9.5 million pre-tax loss in the year to December 2017, despite generating an eye watering £226.5 million revenue.

The group’s latest financial statements, filed at Companies House this month, revealed that the company’s expenses shot up 37% to £184 million over 12 months, including £80.6 million spent on staff remuneration.

While the loss posted in 2017 is lower than the £23 million loss in 2016, it shows the extent of Tilney’s investment in the business over the year.

Over the period, it forked out £20 million on the implementation of an integrated wealth management technology platform and spent £1.4 million to comply with Mifid II and GDPR.

The firm also made a provision of £5.2 million for earn-out payments relating to its acquisition of Webb Holton Associates, PricewaterhouseCoopers’s private client arm and Midas Investment Management Services. Since 2014, the firm has completed the integration of eight separate businesses.

Acquisition and integration costs related to the purchases of Towry and Ingenious in 2016 cost £17.8 million.

A spokesperson said the company had incurred both exceptional items and non-cash charges, and highlighted that earnings before interest, tax, depreciation and amortisation (Ebitda) was £86.6 million over the year.

Chief executive Chris Woodhouse (pictured) commented: ‘Over the coming year, we will further realise the benefits of our scale as we complete the upgrading of our systems and streamline our processes. This will enable us to improve client experience and further enhance productivity as we seek to sustain recent momentum in organic growth, as well as explore any non-organic opportunities that may arise.’

The Irish connection

After a raft of acquisitions, the firm now has numerous subsidiaries across multiple jurisdictions, including Ireland. In Ireland, the firm inherited a lucrative funds business that was previously operated by Towry. This business delivered turnover of £100.8 million in 2017, down from £106.1 million in 2016, according to the accounts of Tilney Fund Managers Ireland.

Until November 2017, this business served as the fund manager of the Tilney Umbrella A unit trust, which sits under the company’s Core Investment Management Service. The accounts show that Tilney made a number of changes to the fund umbrella, starting with the conversion of it into an Irish Collective Asset Management vehicle. The number of holdings in the portfolios was also reduced from 70 to 40 funds, ‘aligning fund selection more closely with those in the MAP [multi-asset portfolio] funds’.

Tilney has said that it delivered nearly £9 million in ongoing fee savings for clients in 2017 following the changes.

When the fund structure was changed, the Irish company ceased serving as the fund managers, with the board of directors considering shutting it down.

A spokesperson explained that the conversion was made ‘so that clients could benefit from the advantages of the Icav structure, compared to the previous unit trust arrangements’.

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