Mattioli Woods plc (AIM: MTW.L), the specialist wealth management and employee benefits business, today issues the following trading update in advance of its interim results for the six months ended 30 November 2017, which are to be announced on Tuesday, 6 February 2018.
- Revenue up over 16% on prior year
- Stronger organic revenue growth of over 15%
- Total client assets at the period end of over £8.3 billion
- Gross discretionary assets under management¹ of over £2.0 billion
- EBITDA margin in first half substantially ahead of 20% target
- Budgeted operating costs to be weighted towards second half of financial year
- Recent acquisitions performing and integrating well
- Strong financial position, with net cash of over £14 million
- Profit outlook for year remains in line with management's expectations
 Including over £214 million of funds under management by the Group’s associate company, Amati Global Investors.
Ian Mattioli, Chief Executive, comments:
"I am delighted to report the six months ended 30 November 2017 represented another period of strong and sustainable growth. We are seeing an increasing flow of organic new business generated by our maturing consultancy team, driven by continued demand for advice, for our products and our services. We have seen strong inflows into our asset management business, comprising our Discretionary Portfolio Management service, Private Investors Club, Custodian REIT plc, the Mattioli Woods Structured Products Fund and the funds managed by our associate company, Amati Global Investors, with gross discretionary assets under management increasing to over £2.0 billion.
"We continue to invest in developing our people and building the capacity to deliver further growth. Our collegiate team structures and proven training plans are accelerating both the maturation of existing consultants and the development of new consultants, while ensuring our core values of sustainability and integrity are maintained.
"Recent acquisitions are performing and integrating well, with revenue growth in the year to date including a full period's contribution from the MC Trustees pension administration business acquired in September 2016. Amati Global Investors has enjoyed strong growth with the value of funds under management increasing from £120 million on investment in February 2017 to over £214 million at the period end.
"The team at Amati was awarded Investment Week's UK Smaller Company Fund Manager of the Year award in July 2017 and has followed this success by being named the Best AIM IHT Portfolio Service for the second year running at the Investment Week Tax Efficient Awards 2017/18 last month. We are delighted with these votes of confidence in Amati's investment philosophy and performance.
"I believe that being open and transparent about reducing costs has led to higher business volumes. As our business grows, I expect operational gearing will allow us to further improve the client offer. We reduced the custody charge for all those clients using our core investment platform with effect from 1 August 2017, which coincided with the launch of our new range of multi asset funds designed to improve investment efficiency, administration and reporting for clients. The value of assets held on the platform increased from £1.2 billion to £1.5 billion during the period.
"In addition, the terms of the Investment Management Agreement for Custodian REIT, the UK real estate investment trust managed by our subsidiary Custodian Capital, were amended in June 2017 to secure both a cost reduction for investors in Custodian REIT and an important long-term revenue stream for the Group. In the first six months of this financial year Custodian REIT raised £33 million of new monies, increasing its market capitalisation to £427 million.
"In November 2017 the Mattioli Woods' Structured Products Fund was named Retail Investment Product of the Year at the Risk Awards 2018. We are delighted the fund has gained industry recognition only 12 months after its launch, having been designed around our core objective of delivering sustainable long-term returns to clients while lowering their costs. The fund offers investors the benefits of collateralisation, instant diversification, continuous availability and liquidity, with £49 million of new investment increasing the fund's value to £147m at the period end.
"Securing the economies of scale and operational efficiencies that I have previously outlined, particularly through the integration of acquired businesses and clients, are key elements of our stated aim to reduce clients' total expense ratios, while maintaining fair and sustainable profit margins for our shareholders.
"Investment in the Group's infrastructure continues. Testing of the next phase of our IT development is underway as we move towards implementation of hosted IT architecture, which will offer enhanced data security, business continuity and scalability for future growth. The move to a new central Leicester office is scheduled for the summer of 2018, approximately three months behind schedule as a result of delays in the delivery of materials and subsequent installation. Importantly, our contract with the developer is at a fixed price and all costs remain in line with expectations. Our investment in a stronger infrastructure base is expected to realise new operational efficiencies and enable further integration across the Group in subsequent years.
"Strong growth in revenue in the first six months of this financial year has translated into strong growth in EBITDA, with EBITDA margin for the first half tracking substantially ahead of our 20% target. As anticipated, operating costs associated with our ongoing IT development, the move to our new Leicester office and the demands of new regulations will be weighted towards the second half of this financial year.
"Acquisitions continue to be a core part of our growth strategy and we believe further consolidation within our core markets remains likely. Our strong balance sheet gives us the flexibility to make further value-enhancing acquisitions.
"The inherent flex within our business model allows us to adapt quickly to address our clients' changing needs. As we seek to broaden our proposition, organically and by acquisition, I expect Mattioli Woods' capabilities as adviser, provider and asset manager to deliver improved client outcomes and secure further profitable growth going forward.
"I believe the Group remains very well placed to succeed in its chosen markets and our profit outlook for the year remains in line with management's expectations."
Mattioli Woods will be announcing its interim results for the six months ended 30 November 2017 on Tuesday, 6 February 2018. An analyst briefing given by Ian Mattioli, Chief Executive and Nathan Imlach, Chief Financial Officer will be held at 09:30 hrs on 6 February 2018 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 email@example.com.