Acquisitions Paying Off

12/09/2008 10:42 am EST

Focus: GLOBAL

John Snowden

Contributor, The IRS Report

John Snowden, editor of The IRS Report, likes the growth potential of this pension advisor.

Mattioli Woods (LSE: MTW.L) was established in 1991 with a view to providing a national pension trouble-shooting and advisory service to controlling directors, senior executives, and professional persons.

Consultancies are predominately fee-based and this side of the business has enjoyed substantial growth over the last few years and now acts for some 2,800 pension fund clients with funds under trusteeship of approximately £1.45 billion.

Essentially the company provides a one-stop proactive and general personal service using a bespoke [customized] IT system backed up by an energetic and well-motivated team of account managers, many of whom have a graduate or professional training.

Specialist services include small self-administered schemes (SSAS), a company pension scheme where the client is often appointed as one of the trustees in order to create a higher degree of control. SSASs can invest in a wide range of assets and can even invest in the client's own business through the purchase of shares or loans or the purchase of company premises. SSASs are ideal for controlling the distribution of family wealth.

Self-invested personal pensions (SIPPs) is another specialty, where the company’s chairman, Bob Woods, played a leading role in its 1990 development. Again the client is usually appointed as a co-trustee. SIPPs can invest in a wide range of assets within the prevailing legislation.

During the last 18 months, the group has made two [successful] acquisitions. In July 2007, Pension Consulting Limited (PCL) was acquired for a total consideration of £1.925 million. In February 2008 the company acquired the trade and assets of JB Group for a total consideration of £2.59 million.

These acquisitions have expanded services to their clients, which should lead to growth in revenues. For the year ending May 31, 2008, revenue was up 20.3% to £10.83 million, with pretax profits rising 14.45% to £3.73 million. The proposed final dividend rose 17.6% from 1.7 pence to 2.0 pence.

The company recently confirmed trading since the start of the year was in line with expectations. Some five brokers cover this company and they all seem fairly positive; their consensus is that profits will rise to £4.32 million in 2009, increasing earnings per share to 17.55 pence. Half-year figures to end-November are due in mid-February. (The shares closed at £221 Monday—Editor.)

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