We Are One of the UK's Leading Providers of Wealth Management
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Annual Report 2019 We are one of the UK’s leading providers of wealth management and employee benefit services. Discover Mattioli Woods Welcome Delivering great outcomes Mattioli Woods is one of the UK’s leading providers of wealth management and employee benefit services, with total assets under management, administration and advice of £9.4bn (2018: £8.7bn) Highlights Revenue Recurring revenues1 Operating profit before financing +2.1% £58.5m 90.2% £9.8m 2018: £58.7m 2018: 84.8% 2018: £9.6m £0.1m (2018: £0.5m) gained on revaluation of Amati option Adjusted EBITDA2 +16.0% Profit before tax +4.1% Adjusted profit before tax4 +8.8% £14.5m £10.2m £12.3m 2018: £12.5m 2018: £9.8m 2018: £11.3m Adjusted EBITDA margin3 of 24.8% (2018: 21.3%) Basic EPS Adjusted EPS5 +8.4% Proposed total dividend +17.6% 30.8p 37.3p 20.0p 2018: 30.8p 2018: 34.4p 2018: 17.0p 1 Annual pension consultancy and administration fees; ongoing adviser charges; level and renewal commissions; Net cash6 banking income; property, discretionary portfolio and other annual management charges. 2 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). 3 Adjusted EBITDA divided by revenue. 4 Before acquisition–related costs, amortisation and impairment of acquired intangibles, changes in valuation £23.2m of derivative financial instruments and notional finance income and non-cash interest charges on provisions. 2018: £20.2m 5 Adjusted profit after tax used to derive adjusted EPS is calculated as adjusted profit before tax less income tax at the standard rate of 19.0% (2018: 19.0%). 6 Cash and short-term deposits less £0.1m (2018: £3.5m) of VAT reclaimed on behalf of and to be repaid to clients. Mattioli Woods plc Annual Report 2019 Strategic report Governance Financial statements Aberdeen wealth management consultancy team Operational highlights and Contents recent developments » Revenue mix remains primarily fee based Strategic report Financial statements » Improved margin through operational Highlights « Consolidated statement efficiencies whilst lowering clients’ At a glance 02 of comprehensive income 66 costs by £3.1m Operating segments 04 Consolidated and company » Total client assets of the Group Client case study 06 statements of financial position 67 and its associate7 up 7.4% to £9.38bn Chairman’s statement 08 Consolidated and company statements of changes in equity 68 (2018: £8.73bn) Our journey 10 Consolidated and company 8 Business model and strategy 12 » Gross discretionary AuM up 9.8% statements of cash flow 70 Chief Executive's review 14 to £2.57bn (2018: £2.34bn) Notes to the financial statements 71 Key performance indicators 19 » Recent acquisitions performing Principal risks 25 Alternative performance and integrating well Corporate social responsibility 29 measure workings 122 » Continued investment in technology, Company information 124 compliance and training Governance Five year summary 125 Chairman’s introduction to governance 34 Financial calendar 126 Board of Directors 38 Corporate governance report 40 For more information, visit our website: Directors’ remuneration report 48 www.mattioliwoods.com Directors’ report 54 Directors’ responsibility for the financial statements 58 Independent auditor’s report 59 7 Includes £409.0m (2018: £286.0m) of funds under management by the Group’s associate, Amati Global Investors Limited, excluding £31.9m (2018: £27.0m) of Mattioli Woods’ client investment and £11.9m (2018: £12.1m) of cross-holdings between the TB Amati Smaller Companies Fund and the Amati AIM VCT plc. 8 Includes £452.8m (31 May 2018: £325.1m) of funds under management by Amati Global Investors Limited, including Mattioli Woods’ client investment and cross- holdings between TB Amati Smaller Companies Fund and Amati AIM VCT plc. Mattioli Woods plc Annual Report 2019 01 At a glance Growing our business Where we operate Offices New acquisitions: 11 Broughtons Financial Planning: Number of employees Based in Oldbury in the West Midlands, Broughtons was founded in 2001 and 586 provides wealth management advice and administration for 250 individual Aberdeen clients, with over £120m of assets Belfast under advice. Birmingham Buckingham Broughtons has a similar culture to Edinburgh Mattioli Woods and the combined Glasgow business gives us opportunities to Leicester grow and develop the client offering. London Manchester Expanding into Newmarket Preston Northern Ireland: With the purchase of Belfast-based SSAS Solutions. Read more on page 9 Our purpose Creating and preserving wealth, our trusted advice gives clients the understanding to achieve their objectives. Our goals Medium-term goals: Total client assets Revenue EBITDA margin £15bn £100m 20%+ Buckingham office 02 Mattioli Woods plc Annual Report 2019 Strategic report Governance Financial statements Why invest? Our model is designed to deliver great client outcomes, leading to strong client retention and sustainable shareholder returns. Focus on strong » Clear strategy to grow and Adjusted EBITDA* diversify revenues shareholder returns » Operating in growing markets £14.5m » Investing in people, technology and infrastructure 2018: £12.5m Scalable business with » Lowering clients’ costs without Recurring revenues** compromising on quality integrity at its core » Retaining existing clients, while seeking new business opportunities 90.2% » Right people, right culture, right skills 2018: 84.8% Consolidation in » Expanding across the value chain Acquisitions since admission to AIM our key markets » Organic and acquired growth strategy » Pipeline of well-considered acquisition 22 opportunities Profit in line with » Securing economies of scale and Profit before tax operational efficiency expectations » Integration of acquired businesses £10.2m » Almost 30 consecutive years of profit growth 2018: £9.8m Securing profitable growth Robust business Track record of Innovation Acquisitions model organic growth * 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). ** Annual pension consultancy and administration fees; ongoing adviser charges; level and renewal commissions; banking income; property, discretionary portfolio and other annual management charges. Mattioli Woods plc Annual Report 2019 03 Operating segments We put our clients at the core of everything we do, with the objective of growing and preserving their assets, while giving them control and understanding of their overall financial position Wealth management We provide wealth management and administration services to individuals and families, embracing all aspects of financial planning, pensions, personal and trust investment, coupled with estate planning. Pension consultancy and administration Investment and asset management Mattioli Woods is a leader in the provision of Self Invested Discretionary management and the provision of bespoke Personal Pension (“SIPP”) and Small Self-Administered investment advice sit at the heart of our investment Pension Scheme (“SSAS”) arrangements, which are often proposition. In meeting our clients’ investment needs we central to our clients’ life planning strategies. We have generally use third parties’ funds, but where we have the established a reputation for technical excellence, widely particular expertise required we look to meet those needs acknowledged within our industry. We maintain our in-house. This approach has led to the development of our technical edge through our in-depth understanding Private Investors Club, Custodian REIT plc and the Mattioli of UK pension legislation, which translates into meaningful Woods Structured Products Fund, in addition to the funds advice given to clients by our consultancy team. managed by our associate company Amati Global Investors Limited (“Amati”). Where appropriate, we intend to expand The provision of personalised and proactive administration upon these opportunities in the future. further differentiates us from our competitors. Continued growth in the quantum of assets under management and advice has enhanced the quality of the Group’s earnings by increasing the proportion of recurring revenues, while the migration of client assets under advice to assets under management allows us to deliver a more efficient wealth management service to those clients. Our services are delivered by a dedicated team, with many years’ experience in finance and investment. 04 Mattioli Woods plc Annual Report 2019 Strategic report Governance Financial statements At the same time, we are focused on Our focus is on holistic planning and providing high levels of personal service, maintaining close relationships with all growing our business, both organically our clients. We plan to continue developing complementary and by acquisition, to deliver strong, services around our core specialisms, blending advice, sustainable shareholder returns over investment and asset management with product provision to progress as a modern financial services business aligned the long-term. to our clients’ needs, producing great client outcomes and lowering clients’ costs. Employee benefits We assist our corporate clients with employee engagement, with the aim of improving recruitment, retention and workplace morale. Property management Employee benefits Our subsidiary company Custodian