Mattioli Woods plc (AIM: MTW.L), the specialist wealth management and employee benefits business, provides the following update on current trading and the ongoing management of the Coronavirus (Covid-19) pandemic.
In our last trading update issued on 27 March 2020, we reported that the Group’s financial performance in the first nine months of the year ended 31 May 2020 was in line with the Board’s expectations.
Unlike many wealth managers, the Group’s revenues are primarily fee-based and hence less sensitive to volatility in investment markets. We have seen sustained demand for advice from clients set around the complexities we are all facing, but as anticipated, the impact of the Covid-19 pandemic on financial markets has resulted in a reduction in the Group’s income streams linked to the value of clients’ assets and its banking revenue. As a result, we now expect total revenue for the year ended 31 May 2020 will be marginally ahead of the prior financial year.
However, in light of the unprecedented trading conditions we have pre-emptively implemented a number of mitigating actions to contain costs and protect our strong financial position. These have included all plc Board directors reducing their basic salary or fees by 50% and our CEO reducing his basic salary to zero until 30 June 2020, with executive directors’ salaries being temporarily rebased from 1 July 2020 to create an annual saving of over £0.4m. At the same time, we have confirmed we will maintain other employees’ basic salaries, with both these positions to be reviewed at 30 November 2020. As previously indicated, remaining staff bonuses and all directors’ bonuses relating to the financial year just ended will not be paid.
We have also reviewed our administrative expenses, with close management of our fixed and discretionary spend expected to achieve further cost savings of £0.4m over the next 12 months. Due to the material impact of our decision not to pay bonuses, coupled with those cost savings already achieved to date, we anticipate the Group’s profit for the year ended 31 May 2020 will now be circa 20% ahead of expectations.
The Group is in a strong financial position and following the completion of the acquisition of Hurley Partners (which is currently awaiting regulatory approval) it will continue to have significant cash balances and headroom on its regulatory capital requirements.
The Board remains positive about the Group’s prospects given all the actions we have taken to reinforce its financial position, ensuring we remain a business that is sustainable and here for the long term, while retaining the flexibility to take advantage of new opportunities to grow our business as they arise. The Board will continue to keep the market updated and intends to provide a further update in July.
Ian Mattioli, Chief Executive Officer of Mattioli Woods, comments:
“Even in these unprecedented times we are continuing to grow and develop the business, both organically and through continued acquisition. We recognise that a significant number of our clients are being affected by these challenging economic conditions. We have taken the decision not to alter any of our fee structures or implement any fee increases, which will continue to give our clients the benefit of reduced total expense ratios. I am confident our combination of lower costs alongside strong investment performance will ensure we continue to deliver good financial outcomes for our clients.
“Ensuring our clients and the Group are in a strong position is key. Having reduced my basic salary to zero from 1 April I am happy to take an ongoing reduction of over 60% of basic salary from 1 July, which sits alongside the positions we have agreed regarding other senior executives’ pay and staff bonuses, all of which enable us to start the new year with clarity around our financial position and strategic plan. I believe that providing our people with security around their own positions will see our clients and the business through this complex period.
“I cannot express enough how much I appreciate our people’s endeavour and their dedication to Mattioli Woods and our clients. We believe the benefits of operating a responsibly integrated business will enable us to secure good client outcomes as we move forward through these complex times.”