Mattioli Woods secures further revenue growth

Investors in specialist wealth management and employee benefits business Mattioli Woods were told how the company had secured further revenue growth and operational efficiencies in the first four months of the year at the company’s annual general meeting on Thursday.

The AIM-traded firm had reported a successful year of growth at its annual results in September, with a “strong flow” of organic new business from individuals and corporates coupled with continued demand for advice from existing clients.

Chairman Joanne Lake said on Thursday that the board was “proud” of the strong shareholder returns it had delivered over the years, and remained committed to growing the dividend, while maintaining an appropriate level of dividend cover.

As it had previously announced, the board was proposing a 20.6% increase in the total dividend for the year at Thursday’s meeting.

“We have secured further revenue growth and operational efficiencies in the first four months of this financial year, and I believe the benefits of operating our integrated model will allow us to further reduce clients' total expense ratios (TERs), whilst realising new operational efficiencies and synergies,” Lake told shareholders.

“As reported by many participants in the UK wealth management sector, we have seen a lower level of client activity over the summer months, attributed primarily to poor investor sentiment and prolonged uncertainty over Brexit.

“However, the impact on revenue of this and reducing clients' TERs has been more than offset by resource and other administrative cost savings, resulting in EBITDA margin for the year to date tracking substantially ahead of target.”

In addition, Lake explained that the the bespoke investment services the group had developed enjoyed aggregate net inflows of more than £100m, in line with the “strong results” reported for the equivalent period last year.

“Unlike many wealth managers, the majority of our revenues are fee-based, rather than being linked to the value of assets under management, administration or advice.

“Growth in profit for the year to date includes the positive contribution from the Broughtons Financial Planning business acquired in August and the group's associate company, Amati Global Investors, which has enjoyed further growth in the value of gross funds under management to over £350m.”

The company completed its move to new Leicester premises earlier in the month, Joanne Lake confirmed.

“This more flexible working environment will allow us to continue to grow the business and realise further operational efficiencies, whilst ensuring our client services continue to be first class.

“In addition, we will benefit from future rental savings of approximately £0.85m per annum.”

Lake added that, although there was “some caution” around markets, the board believed the group was well placed to continue to grow, both organically and by acquisition.

“Many commentators predict that next week's Budget will include changes to pension tax relief and we expect further changes in pension legislation, fresh speculation around the shape of Brexit and any further volatility in markets to drive a sustained demand for advice.

“The inherent flex within our business model will allow us to adapt to meet the needs of our clients in what remains a changing marketplace, with a key part of our strategy being to lower the cost of the services we provide while growing a long-term sustainable business.”

The board was continuing to invest in the group, Lake said, as it looked to build upon its success to date.

“Our profit outlook for the year is in line with management's expectations and I believe we remain very well-positioned to progress further towards the ambitious longer-term goals we have set.”