Mattioli Woods lifts profit forecast after slashing costs

(Sharecast News) - Specialist wealth management and employee benefits company Mattioli Woods updated the market on its trading through the Covid-19 coronavirus pandemic on Monday, having said at the end of March that its financial performance in the first nine months of the year ended 31 May was in line with expectations.
The AIM-traded firm said that its revenues were primarily fee-based, and thus were less sensitive to volatility in investment markets.

It said it had seen sustained demand for advice from clients set around the complexities they were facing, but as expected, the impact of the pandemic on financial markets had resulted in a reduction in its income streams linked to the value of clients' assets and its banking revenue.

As a result, it said it now expected total revenue for the year ended 31 May to 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," the board said in its statement.

"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, with executive directors' salaries being temporarily rebased from 1 July 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 on 30 November 2020."

As it had previously indicated, Mattioli Woods said remaining staff bonuses and all director bonuses relating to the financial year just ended would not be paid.

It said it had also reviewed its administrative expenses, with close management of its fixed and discretionary spend expected to achieve further cost savings of £0.4m over the next 12 months.

Due to the material impact of its decision not to pay bonuses, coupled with those cost savings already achieved to date, the board said it expected the group's profit for the year ended 31 May would now be about 20% ahead of expectations.

The company said it was in a strong financial position and, following the completion of the acquisition of Hurley Partners, which was currently awaiting regulatory approval, it said it would continue to have significant cash balances and headroom on its regulatory capital requirements.

"Even in these unprecedented times we are continuing to grow and develop the business, both organically and through continued acquisition," said chief executive officer Ian Mattioli.

"We recognise that a significant number of our clients are being affected by these challenging economic conditions.

"I am confident our combination of lower costs alongside strong investment performance will ensure we continue to deliver good financial outcomes for our clients."

At 1455 BST, shares in Mattioli Woods were up 7.69% at 770p.