In a trading update for the six months ended November 30, chief executive Ian Mattioli said the group experienced a lower level of client activity due to “poor investment sentiment”.
"Slightly lower than expected revenue growth is a combination of the group reducing our clients' costs and general market conditions,” Mattioli said.
“The impact of this has been more than offset by a continued focus on operational efficiencies and other administrative cost savings, resulting in strong profit growth and our EBITDA margin for the period tracking substantially ahead of our 20% target.”
Managing costs amid uncertain market outlook
He added that the group intends to continue to manage its cost base amid an uncertain market outlook. Mattioli believes fees for financial services in the UK are “too expensive” and the company aims to lower client costs.
“Securing operational efficiencies and economies of scale, particularly through the integration of acquired businesses and clients, are key elements of our aim to reduce clients' total expense ratios and ensure sustainable returns for our shareholders,” he said.
The group said adjusted earnings (EBITDA) and adjusted pre-tax profit were strongly ahead of the previous year on the back of cost cuts. Profit was also boosted by a contribution from the Broughtons Financial Planning business the company acquired in August 2018 and an increased share of profit from its associate company, Amati Global Investors. The value of its gross funds under management rose to more than £348mln at the end of the period.
Total client assets at the end of the period amounted to £8.8bn. Gross discretionary assets under management came to £2.4bn with aggregate net inflows of more than £140mln.
Mattioli Woods maintains profit guidance
"Although there is some caution around markets, we believe the group is well placed to secure further growth, both organically and by acquisition, and further consolidation within our core markets remains likely,” Mattioli said.
“Our profit outlook for the year remains in line with management's expectations and I am confident we can secure further progress towards the ambitious longer-term goals we have set."