Mattioli Woods plc (AIM: MTW.L), the specialist wealth management and employee benefits business, today issues the following trading update for the year ended 31 May 2019. The final results for the year will be announced on Tuesday, 3 September 2019.
- Strong growth in adjusted EBITDA[1] and adjusted PBT[2] versus prior year
- Lowered costs for our clients while maintaining EBITDA margin ahead of 20% target
- Total client assets of the Group and its associate[3] increased to £9.4 billion at the year end
- Gross discretionary assets under management[4] of £2.6 billion, with net inflows of over £250 million during the year
- Recent acquisitions performing and integrating well
- Strong financial position, with cash of over £23 million
- Post-year end appointments of Chief Compliance and Risk Officer and Group Finance Director
Ian Mattioli, Chief Executive, comments:
"I am pleased to report another year of sustainable profit growth, despite the ongoing political and economic uncertainties and generally poor investor sentiment over the 12 months ended 31 May 2019.
"Our integrated business model allows us to address more of the value chain across advice, administration, platform, investment management and product provision. We have used the resultant economies of scale and operational efficiencies to reduce clients' costs, while delivering sustainable returns for our shareholders.
"The Financial Conduct Authority's evaluation of the Retail Distribution Review ("RDR") and the Financial Advice Market Review ("FAMR") may lead to regulatory pressure on the sector to reduce the cost to consumers. Our long-term aim continues to be to reduce clients' total expense ratios towards 1%, meaning we are well-positioned as the market changes and evolves.
"Throughout the period we maintained our focus on client service and developing our proposition. As previously communicated, a combination of the Group reducing costs for our clients and the general market conditions led to slightly lower than expected revenue for the year. However, the financial impact of this has been more than offset by the realisation of operational efficiencies and other planned administrative cost savings, resulting in profit growth in line with expectations and EBITDA margin for the year tracking substantially ahead of our 20% target.
"By putting clients first we are able to build a business that is sustainable over the long term. The last year saw several operational achievements within the business, including:
A seamless move to our new freehold office in Leicester, incurring significantly lower downtime and relocation costs than anticipated. This development allows us to benefit from future rental savings of approximately £0.85 million per annum, whilst providing the capacity for future growth;
- The implementation of a cloud-hosted IT architecture across the Group;
- The introduction of an integrated human resource management and payroll system;
- The launch of a refreshed Mattioli Woods' brand;
- Implementation of changes to the regulatory regime (General Data Protection Regulations ("GDPR") and the Markets in Financial Instruments Directive II ("MiFID II")) and preparation for the introduction of the Senior Managers and Certification Regime; and
- Continued investment to improve our client and service proposition.
"As part of our normal planning, we monitor the Group's capabilities and assess what new skills are necessary to strengthen the business over time, taking account of the existing balance of knowledge, experience and diversity. This year, we have implemented a number of changes which place the business in a strong position.
"Following the completion of rigorous recruitment processes, I am delighted to announce the appointment of James Wilson as Chief Compliance and Risk Officer, and the appointment of Ravi Tara to the new role of Group Finance Director (a non-plc board position), reporting to the Chief Financial Officer.
"James has over 30 years' financial services experience, including roles at the Law Society of Scotland, the Financial Services Authority and senior positions at IFG Group, Royal Bank of Scotland Group, Standard Life, TD Wealth International, Speirs & Jeffrey and FNZ, and has a strong background in pensions, investments, property and financial planning. His appointment will help us to build upon the strong compliance culture we already have in place.
"Following the further expansion of the Group and its operations we have created the new role of Group Finance Director, with responsibility for the oversight of the Group's financial systems and controls. Ravi's experience of improving operational delivery and cost efficiency in previous roles with Capita plc, Weetabix Food Company, JP Morgan, Barclays Capital and PwC, will add real value to our proposition as we position the Group for further growth.
"We have continued to progress our strategic initiatives and in March were delighted to announce the acquisition of SSAS Solutions (UK) Limited, which is based in Belfast and acts as SSAS practitioner to over 350 schemes with approximately £380 million of assets under administration. This followed the acquisition of Broughtons Financial Planning Limited in the first half of the financial year, which has integrated well and contributed positively to our trading results since acquisition. We will seek to build on our track record of successful acquisitions by continuing to assess opportunities that meet our strict criteria.
"Given the success of the joint venture, we believe the Group retaining a minority interest in Amati Global Investors Limited ("Amati") is the optimal structure for all stakeholders and last month we announced the cancellation of our option to acquire the remaining 51% of Amati in return for a payment of £0.75 million from the management team. Amati is an excellent fund manager that has performed strongly since Mattioli Woods' initial investment. Over this period, Amati has seen gross funds under management[5] grow from £120 million to over £452 million at the year end, won numerous industry awards, and the TB Amati UK Smaller Companies fund has been rated by three major fund research houses. As a result of Amati's strong performance the Group's share of its profits has increased year-on-year."
Murray Smith, Group Managing Director, has decided to stand down from the Board at the Company's next Annual General Meeting on 21 October 2019. Murray will continue in a full-time role as Founder Director to the Group and his focus will be on his client portfolio, acquisitions and acting as an ambassador for Mattioli Woods.
Murray has been instrumental to the success of the Group and in this new role we will continue to benefit from his experience and insight. The period from now to the Annual General Meeting provides for a considered handover of Murray's management responsibilities to our Deputy Group Managing Director, Michael Wright.
The Board remains committed to developing the corporate governance and management structures of the Group to ensure they continue to meet the changing needs of the business. Following Murray stepping down as a director the Company will have a Board comprising a majority of independent directors, which we believe represents the right governance structure for the business.
Ian Mattioli, Chief Executive, comments:
"Whilst political and economic uncertainty might continue to impact investor sentiment in the short term, we are confident that our focus on addressing the changing needs of our clients means we are well-positioned to deliver further growth. The opportunity for Mattioli Woods is significant, as people seek to take charge of their money and manage it multi-generationally. At the same time, savings and investments are becoming more complicated. Clients need long-term advice and strategies more than ever before and we will continue to provide quality solutions, with our focus on client service and the inherent agility within our business model allowing us to continue to adapt to the changing wealth and asset management marketplace.
"Over the last few months we have seen some positive momentum starting to build, with greater client activity and increasing inflows into the bespoke investment services the Group has developed. I expect the Group to secure organic revenue and profit growth in this new financial year, while progressing our acquisition strategy, where further consolidation within our core markets remains likely. I believe we are well-positioned to take advantage of these opportunities and progress further towards the ambitious longer-term goals we have set."
Mattioli Woods will be announcing its final results for the year ended 31 May 2019 on Tuesday, 3 September 2019. An analyst briefing given by Ian Mattioli, Chief Executive and Nathan Imlach, Chief Financial Officer will be held at 09:30 hrs on 3 September 2019 at Canaccord Genuity Limited, 88 Wood Street, London, EC2V 7QR.
Those analysts wishing to attend are asked to contact Ed Gascoigne-Pees at Camarco on +44 (0) 20 3757 4984 or at ed.gascoigne-pees@camarco.co.uk.
1. Earnings before interest, taxation, depreciation, amortisation, impairment, changes in valuation of derivative financial instruments and acquisition-related costs, including share of profit from associates (net of tax).
2. Profit before tax, adding back amortisation and impairment of acquired intangibles, acquisition-related costs and changes in valuation of derivative financial instruments.
3. Includes £383 million of funds under management by the Group's associate, Amati Global Investors Limited, excluding £58 million of Mattioli Woods' client investment and £12 million of cross-holdings between the TB Amati Smaller Companies Fund and the Amati AIM VCT.
4. Includes £453 million of funds under management by the Group's associate, Amati Global Investors Limited, including £58 million of Mattioli Woods' client investment and £12 million of cross-holdings between the TB Amati Smaller Companies Fund and the Amati AIM VCT.
5. Includes £12 million of cross-holdings between the TB Amati Smaller Companies Fund and the Amati AIM VCT plc
