Mattioli Woods posts decent first half as it looks to Brexit

Specialist wealth management and employee benefits provider Mattioli Woods reported a 3.8% improvement in revenue in its interim results on Tuesday, to £30.3m.

The AIM-traded firm said for the period, recurring revenues represented 91.5% of total revenue, rising from 89.9% year-on-year.

Operating profit before financing grew 7.4% for the six months ended 30 November, to £5.8m, while adjusted EBITDA was ahead 11.7% at £8.6m.

Mattioli Woods said its adjusted EBITDA margin was 28.4%, rising from 26.4%.

The company’s profit before tax was 7.1% higher at £6.0m, and its adjusted profit before tax advanced 9.2% to £7.1m.

Basic earnings per share were 6.5% higher at 18.0p, while adjusted earnings per share were up 8.1% at 21.4p.

The board hiked the interim dividend by 15.3% to 7.3p, and said the firm was in a “strong” financial position, with cash of £20.1m, up from £16.8m a year earlier.

On the operational front, Mattioli Woods said its revenue mix remained primarily fee-based, and said it saw improved margins following its operational restructure.

Total client assets of the group and its associate stood at £9.4bn, in line with the figure at the start of the period.

Gross discretionary assets under management were up 3.8% at £2.7bn, with the company adding that its recent acquisitions were performing and integrating well.

It noted the acquisition of the Turris Partnership in December, and said it made continued investment in technology, compliance and training.

The board said the profit outlook for the current year remained in line with management's expectations.

“I am pleased to report revenue increased by 3.8% to £30.3m for the six months ended 30 November, with improved organic growth of 1.8% primarily driven by increases in discretionary portfolio management, direct SSAS and SIPP and property management fees,” said chief executive officer Ian Mattioli.

“This organic growth was supplemented by a full six-month contribution from the Broughtons and SSAS Solutions businesses acquired in the prior financial year, which are performing and integrating well.

“Adjusted EBITDA margin increased to 28.4%, with additional efficiencies and cost savings realised following the planned restructuring of our client facing operations and the migration of acquired pension portfolios onto our proprietary MWeb administration platform.”

Mattioli said that in addition, the adoption of IFRS 16 decreased other administrative expenses by £0.4m, representing £0.4m of the increase in adjusted EBITDA and 1.3% of the increase in adjusted EBITDA margin.

“We believe the benefits of operating a responsibly integrated business allows us to secure great client outcomes including controlling clients' costs whilst delivering strong, sustainable shareholder returns over the long term.

“The board remains committed to growing the dividend, while maintaining an appropriate level of dividend cover.

“Accordingly, the board is pleased to recommend the payment of an increased interim dividend, up 15.3% to 7.3p per share.”

In addition to the positive contribution from recent acquisitions, Mattioli noted that the group generated an increased share of profit from Amati of £0.3m, whose total funds under management increased to £510.2m at period end.

“In December 2019, we were pleased to follow the Broughtons and SSAS Solutions transactions with the acquisition of the Turris Partnership, which provides chartered financial planning and wealth management advice and has over £65m of client assets under advice.

“Clients need long-term advice and strategies more than ever before.

“More than a decade of low interest rates and evolving client preferences, including environmental, social and governance considerations, have created challenges for people seeking to generate income, while preserving and growing their capital.”

Mattioli explained that, while the company anticipated greater client activity and increasing inflows into its bespoke investment services following the UK general election result in December, there remained “some uncertainty” around the exact shape of Brexit.

“We will continue to provide quality solutions, maintaining our focus on client service and continuing to adapt our business model to the changing market, integrating asset management and financial planning to build upon our established reputation for delivering sound advice and consistent investment performance, while looking to reduce clients' costs.

“We plan to build on the progress achieved in the first half of this financial year, advancing our strategic initiatives, such as the development of new products and services and our own IT solutions where possible.

“Our profit outlook for the year remains in line with management's expectations and we believe the Group is well-positioned to grow, both organically and by acquisition, to continue delivering sustainable shareholder returns.”

At 1118 GMT, shares in Mattioli Woods were up 2.38% at 860p.