Mattioli Woods plc (AIM: MTW.L), the specialist wealth management and employee benefits business, today issues the following trading update in advance of its final results for the year ended 31 May 2017, which are to be announced on Tuesday, 5 September 2017.
- Achieved significant milestone, with annual revenues of over £50m
- Strong flow of organic new business
- Reducing client costs while maintaining target EBITDA margin
- Strong growth in gross discretionary AuM to over £1.6bn at year end
- Over £100m now invested in Mattioli Woods Structured Products Fund
- Recent acquisitions performing and integrating well
- Strong financial position, with net cash of £23m
Ian Mattioli, Chief Executive, comments:
"I am delighted to report another year of growth, driven by a strong flow of new business and continued demand for advice from clients, which together with acquisitions completed in this and the prior financial year has seen the Group achieve a significant milestone in generating annual revenues of over £50m.
"We have enjoyed further growth in our investment and asset management business, with gross discretionary assets under management1 ("AuM") increasing by £460m during the year, with £190m of new monies invested in our discretionary portfolio management service. The Mattioli Woods Structured Products Fund was launched in November 2016, with £98m of new monies invested during the year and the value of the fund now exceeds £100m. Custodian REIT, the UK real estate investment trust managed by our subsidiary Custodian Capital, raised £76m of new monies during the year and now has a market capitalisation of circa £400m.
"Our purchase of 49% of Amati Global Investors Limited ("Amati"), which we announced in February, is an exciting extension to our asset management business. Amati's total AuM had increased from £120m at acquisition to over £165m at the year end. Amati is the manager of Amati VCT plc and Amati VCT 2 plc, whose boards are considering whether a merger of the two companies is in the best interest of shareholders. Whether a merger is proposed or not, the boards intend to launch a joint fundraising to raise around £20m between the two VCTs later this year and we anticipate further growth in the value of Amati's AuM in the year ahead.
"Acquisitions continue to be a core part of our growth strategy. In September 2016 we were pleased to announce the acquisition of MC Trustees, which is an excellent fit with our existing pension business and has contributed positively to the Group's trading result for the year. We believe further consolidation within our core markets remains likely and our strong balance sheet gives us the flexibility to make further value-enhancing acquisitions.
"We have enjoyed strong organic growth, winning over 1,200 new wealth management cases during the year, comprising SIPP, SSAS and personal clients. In addition, over 100 new corporate clients were attracted to the Group's broader range of employee benefits services during the year.
"We continue to see strong demand for advice from clients, driven by lifestyle, increasing longevity, tax and other legislative changes, including the pension freedoms that introduced a major shift in how people can access their pensions. As has been widely reported in the media, HMRC has recently challenged all SIPP providers on whether pension contributions could be made in-specie. Irrespective of the result of HMRC's claims, the impact on the financial position of the Group is expected to be neutral.
"The FCA published the final report on its asset management market study last week, confirming some of the findings set out in its interim report published in November 2016, including its assessment that there is weak price competition in the asset management industry. In addition, the FCA has said it will assess firms' vertical integration and the entire value chain of investing, as well as the platform market, in its upcoming platform market review.
"We strongly support the FCA's objectives of increased transparency and better alignment of interests between fund managers and investors. Improving outcomes and reducing client costs have been key objectives of ours for several years, driving the development of our vertically-integrated model, and we are delighted to confirm that with effect from 1 August 2017 we will be reducing the custody charge for all those clients using our core investment platform. This will coincide with the launch of a new range of multi asset funds designed to improve the efficiency, reporting and transparency of our discretionary portfolio management service for clients, while building capacity and delivering operational efficiencies for the Group.
"This follows our recent announcement that the terms of the Investment Management Agreement between Custodian Capital and Custodian REIT have been amended to secure both an immediate cost reduction for investors in Custodian REIT and an important long-term revenue stream for the Group.
"I believe Mattioli Woods' capabilities as adviser, provider and asset manager will allow us to better address our clients' changing needs and to deliver further improvements in client outcomes going forward.
"The past 12 months have seen changes in many respects. The General Election result has thrown up fresh speculation around the shape of 'Brexit'. Regulatory changes continue at considerable pace and our immediate focus is on ensuring that we are fully compliant with those changes already in train, such as the Markets in Financial Instruments Directive II ("MiFID II"), the General Data Protection Regulations ("GDPR") and the Senior Managers Regime ("SMR").
"From a systems and processes perspective, investment in our bespoke pension administration and wealth management platform continues in line with expected spend, while we are reviewing the possibility of moving to a hosted IT infrastructure, which may offer improved data security, business continuity and scalability for future growth.
"As an Investors in People company we are committed to developing our people and building the capacity to deliver sustainable growth. In the last financial year we moved into larger premises in London and opened a new office in Manchester, strengthening Mattioli Woods' position in the North West following the acquisition of Preston-based financial advisory firm Taylor Paterson in the prior financial year.
"Construction of our new central Leicester office, which will provide our staff with a modern working environment and capacity for further growth, remains scheduled to complete around the end of this calendar year with the move from our existing offices scheduled for the second quarter of 2018. Costs are in line with expectations.
"Our ambition is to see our brand become an even stronger force in the UK financial services sector. I am delighted with the performance of our business for the last financial year and believe we remain well-positioned to secure further profitable growth going forward."
1 Excludes assets under management by Amati Global Investors Limited.
As previously notified, Mattioli Woods will be announcing its final results for the year ended 31 May 2017 on Tuesday, 5 September 2017. An analyst briefing given by Ian Mattioli, Chief Executive and Nathan Imlach, Chief Financial Officer will be held at 09:30 hrs on Tuesday, 5 September 2017 at the offices of Canaccord Genuity Limited, 88 Wood Street, London, EC2V 7QR.
Those analysts wishing to attend the briefing are asked to contact Ed Gascoigne-Pees at Camarco on +44 (0) 20 3757 4984 or at firstname.lastname@example.org.