9th Sep 2015 08:12
LONDON (Alliance News) - Mattioli Woods PLC on Wednesday reported higher pretax profit on the back of new pensions freedoms in the UK, and said it has agreed to acquire wealth manager and employee benefits company Taylor Patterson Group Ltd for up to GBP8.3 million as it looks to expand.
In a statement, the wealth management and employee benefits business said it made a GBP5.3 million pretax profit in the year ended May 31, compared with GBP5.1 million in the prior year. Mattioli Woods lifted its dividend for the year to 10.50 pence from 9.10p.
Revenue rose to GBP34.6 million from GBP29.3 million. After subtracting costs such as benefits for the company's own employees, administration, share based payments, amortisation and impairment, and depreciation, operating profit rose to GBP5.4 million from GBP5.1 million. That excludes financing costs.
Executive Chairman Bob Woods said that new pensions freedoms introduced by the UK government have created more demand for financial advice, helping to bring about an 18% increase in revenue to GBP34.6 million.
Client assets under management, administration and advice increased by 17% to GBP5.4 billion at the end of May, with growth in fees based on the value of clients' assets under management and advice driving up recurring revenue to 81.4% of the total from 78.1% in the prior year. The value of discretionary assets under management now exceeds GBP1.01 billion, the chairman said.
Woods said that acquisitions remains a "core part" of the company strategy to grow, having bought 15 businesses and client portfolios over the past decade.
The acquisition of Taylor Patterson, a financial planning specialist, which required an initial payment of GBP5.0 million split between cash and Mattioli Woods shares, gives Mattioli Woods a business based in Preston, Lancashire, North West England that made a GBP900,000 pretax profit on revenue of GBP3.2 million in the year ended July 31.
Taylor Patterson had about GBP790,000 in net assets at that time. The remaining cash payment of up to GBP3.3 million for the acquisition has been deferred for three years, and depends on financial targets covering revenue growth and earnings before interest, tax, depreciation and amortisation. The deal is expected to boost Mattioli Woods' earnings in the first full year of ownership.
"The Taylor Patterson team has a proven ability to win high-quality new business and the transaction gives us an exciting new distribution channel for Mattioli Woods' services. I believe this will strengthen our market position and is an exciting step forward in the development of Mattioli Woods as a broader wealth management business," Chief Executive Ian Mattioli said in a statement.
Addressing corporate governance, Chairman Woods said the company has committed to separate the chairmanship from executive responsibilities, meaning he will continue in his current capacity through to October 2016, when Joanne Lake, the deputy chairman appointed in June, is set to become non-executive chairman.
Woods will then remain on the board in a full-time executive role as founder director, acting as an ambassador for the company and developing the company's profile in its chosen markets.
By Samuel Agini; [email protected]; @samuelagini
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