Annual Report 2022
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one of the UK’s leading integrated
wealth and asset management
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Mattioli Woods
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Welcome
Mattioli Woods plc
is a responsibly integrated, full service wealth
management group, growing organically through
expanding its network of 185 consultants and
complementary investment management offering,
and through the acquisition and integration of
complementary businesses, with the aim of
enhancing the Group’s client proposition while
delivering strong shareholder returns.
Our purpose
Creating and preserving wealth,
our trusted advice gives clients
the understanding to achieve
their objectives.
Our mission
To provide the best wealth
management and employee
benefit outcomes for our clients.
Our culture
Our culture is based on
professionalism, putting clients first
and adopting a collegiate approach.
Retaining the integrity, expertise and
passion of our people continues
to be a priority coupled with a
strong compliance culture focused
on delivering positive customer
outcomes.
Mattioli Woods plc Annual Report 2022 Delivering for our clients
Supporting families in planning for their future
We have developed our SIPP and SSAS to be multi-member arrangements,
allowing our clients’ children to consolidate or build their retirement fund.
We can even talk through potentially reducing fees based on their shares
of the overall pension scheme.
Creating and preserving wealth
There is no ‘one size fits all’ solution when it comes to advising on financial
planning matters, the management of assets or employee benefit solutions.
We have structured our services to be flexible and responsive to the differing
needs of our clients.
Promoting retirement goals with our bespoke strategies
The key to understanding what our clients want is understanding their objectives.
We create a bespoke strategy to target their retirement goals.
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Strategic Report
Highlights
Our vision and approach
Chair’s statement
Honorary recognition
Chief Executive’s review
Market overview
Our services
Key performance indicators
Financial performance
and future developments
Principal risks and uncertainties
Section 172 statement
Stakeholders
Environmental performance
and strategy
Corporate social responsibility
Advancing opportunities for all
Advertorial
Governance
Governance overview
Board of Directors
Corporate governance report
Directors’ remuneration report
Directors’ report
Directors’ responsibilities
for the financial statements
Independent auditor’s report
Financial Statements &
Company Information
Consolidated statement
of comprehensive income
Consolidated and Company
statements of financial position
Consolidated and Company
statements of changes in equity
Consolidated and Company
statements of cash flows
Notes to the financial statements
Alternative performance
measure workings
Related undertakings
Company information
Five-year summary (unaudited)
Financial calendar
The latest online
More details on our
investor relations
can be found on
our website:
mattioliwoods.com
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Highlights
Mattioli Woods in numbers
Financial highlights
Total client assets of the Group
and its associate1
£14.9bn
+23.1%
2021: £12.1bn
at year end
Strong organic revenue growth
£62.2m
+10.0%
2021: £56.6m
Revenue
£108.2m
+72.8%
2021: £62.6m
Positive contribution
from acquisitions
£46.1m
2021: £6.0m
Increased new client wins
1,084
2021: 898
reflecting investment in business
development initiatives
Recurring revenues 2, 3
86.8%
2021: 92.7% of total revenue
reflecting contributions from
Maven Capital Partners and
increased initial client fees
Adjusted EBITDA2, 4
Adjusted EBITDA margin 5 of
30.1%
2021: 27.7%
Proposed final dividend of
17.8p
2021: 13.5p
giving a total dividend rise
of 24.3% to 26.1p (2021: 21.0p)
£32.6m
+88.4%
2021: £17.3m
including our post-tax profit of our
associate Amati Global Investors,
which grew 45.5% to £1.6m
Adjusted EPS3, 6
48.3p
+17.5%
2021: 41.1p
growing organically and through
accretive acquisitions
Strong cash generation
and overall financial position with
cash at 31 May 2022
£53.9m
2021: £21.9m
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Includes £1,100.5m (2021: £1,196.0m) of funds under management by the Group’s
associate, Amati Global Investors Limited, excluding £93.6m (2021: £94.9m) of
Mattioli Woods’ client investment and £14.8m (2021: £17.2m) of crossholdings
between the TB Amati Smaller Companies Fund, TB Amati Strategic Metals Fund
and the Amati AIM Venture Capital Trust (“VCT”) plc.
2 Annual pension consultancy and administration fees; ongoing adviser charges; level
and renewal commissions; banking income; property, discretionary portfolio and other
annual management charges adjusted for Private Investor Club initial fees.
3 This is an alternative performance measure (“APM”) the Group reports to assist
stakeholders in assessing performance alongside the Group’s results on a statutory
basis. APMs may not be directly comparable with other companies’ adjusted measures
and are not intended to be a substitute for, or superior to, any IFRS measures of
performance. Supporting calculations for APMs and reconciliations between APMs
and their IFRS equivalents are set out in the alternative performance measure workings
section of the Annual Report. See page 17 for further details of APMs.
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Operational highlights
and recent developments
• Diversified revenue mix with 48.0%
(2021: 54.2%) fixed, initial or time-
based fees uncorrelated to market
performance
• Gross discretionary AuM7 rose 25.8%
to £5.1bn (2021: £4.1bn), with net
inflows of over £341m in the year
• Strong revenue and earnings
contribution from recent acquisitions
that are performing ahead of
expectations and integrating well
• Acquisition of Ferguson Financial
Management completed in May 2022,
with a strong pipeline of further
accretive acquisition opportunities
• Continued progress on strategic
initiatives with increased investment in
technology, compliance and training
• Strong new business pipeline versus
prior year
4 Calculated as earnings before interest, taxation,
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depreciation, amortisation, acquisition-related costs,
gain on bargain purchase, contingent consideration
treated as remuneration and including share of profit
from associates (net of tax).
5 Adjusted EBITDA divided by revenue.
6 Adjusted profit after tax used to derive adjusted EPS
is calculated as adjusted profit before tax as defined
above less income tax at the standard rate of 19%
(2021: 19%).
Includes £1,208.9m (31 May 2021: £1,308.1m) of
funds under management by Amati Global Investors
Limited, including Mattioli Woods' client investment
and crossholdings between TB Amati Smaller
Companies Fund, TB Amati Strategic Metals Fund
and Amati AIM VCT plc.
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Our vision and approach
Our business model
Mattioli Woods plc (“Mattioli Woods”,
“MTW”, “the Group” or “the Company”)
is a diversified wealth and investment
management business. Our core
proposition integrates asset
management and financial planning
to serve a market predominantly
consisting of mass affluent individuals,
controlling directors and owner-
managed businesses, professionals,
executives, families and retirees.
We plan to expand our reach to new
client demographics as we continue
developing both our investment and
product propositions.
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Our vision
Our aim is to achieve continued
growth across our core pillars of advice,
investments and administration while
delivering exceptional client outcomes,
specifically through:
Our medium-term financial goals are for the Group
to deliver:
Revenue
EBITDA
£300m
£100m
New client wins and greater integration
across the value-chain for existing clients
Total client assets
£30bn
Enhancing the Group’s investment proposition
Further investment in developing the
Group’s digital platform and client portal
Simplifying administration processes
and improving productivity; and
Accelerating growth through strategic
acquisitions
We will continue to put our clients and their needs at the core of
everything we do, with the objective of growing and preserving
their assets, while giving them control and understanding of their
overall financial position. At the same time, we aim to grow our
business, both organically and through acquisition, to deliver
strong, sustainable shareholder returns over the long-term.
Our focus on holistic planning, providing high levels of personal
service and maintaining close multi-generational relationships
with our clients has also been a key attribute of each of the
financial planning businesses acquired during the last financial
year. We plan to continue developing complementary services
around our core specialisms, blending advice and investment
management with specialist product provision to progress as a
modern financial services business aligned to our clients’ needs.
We believe this will allow us to deliver great client outcomes while
keeping clients’ costs low, with our integrated model allowing us
to address more of the value chain.
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ADVICE
ADMINISTRATION
INVESTMENT
Financial
planning
Employee
benefits
Pensions
and trusts
Platform
Investment
products
Investment
management
• Advice-led financial planning, wealth
management and employee benefits
• Bespoke advice
• Pension and personal wealth
• Trusted expertise
• Close client relationships
• End-to-end administration
• Discretionary portfolio and fund
via proprietary MWeb pension
administration platform
• Strategic partnerships with external
providers
• Proactive, personal service
• 11,000+ SIPP and SSAS schemes
• Custody, dealing and client banking
• Investing in technology to improve
efficiency
management
• Addressing clients’ needs
• Innovative new product development
• Acquisitions adding to product options
• Using best of what we and other
providers offer
• Significant growth opportunity
Own distribution through our team
of 185 consultants
Direct and intermediated distribution
for advised and non-advised clients
Extending from direct to intermediated
and institutional clients including external
Key differentiator and source
of sustained organic growth
Targeted investment to create capacity
by improving efficiency and margins
Significant growth opportunity to
combine and enhance offering
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Our vision and approach continued
Our operating segments
Wealth and asset management
Our wealth and asset management business comprises
four operating segments: pensions consultancy and
administration, investment management, private
equity asset management and property management.
We provide services to individuals, families and
institutions, embracing all aspects of financial planning
and investment, including specialist pensions and
estate planning, personal and trust investment, and
fund management.
Pension consultancy and
administration
Mattioli Woods is a leader in the provision
of Self Invested Personal Pension (“SIPP”)
and Small Self-Administered Pension
Scheme (“SSAS”) arrangements, which are
often central to our clients’ life planning
strategies. We have an established
reputation for technical excellence,
widely acknowledged within our industry.
We maintain our technical edge through
our in-depth understanding of UK
pension legislation, which translates into
meaningful advice given to clients by our
consultancy team.
To support our advised and non-advised
clients we specialise in the provision
of proactive and personalised pension
administration, which differentiates us from
our competitors. Our 11,000+ SIPP and SSAS
clients are supported by our proprietary
MWeb pensions administration platform, into
which additional investment is planned to
further enhance our client experience and
deliver operational efficiencies.
Mattioli Woods plc Annual Report 2022 Wealth and asset management
Employee benefits
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Investment management
Property management
Employee benefits
Custodian Capital facilitates direct property
ownership on behalf of pension schemes
and private clients and is the external
discretionary fund manager of Custodian
Real Estate Investment Trust plc (“Custodian
REIT” or “CREIT”), a UK real estate
investment trust listed on the Main Market
of the London Stock Exchange. We believe
investment in good quality properties with
high grade tenants typically provides stable
returns over the long term and our property
team draws on many years’ commercial
property investment experience.
The Group advice offering also comprises
the employee benefits advice business. We
assist our corporate clients with employee
engagement, with the aim of improving
recruitment, retention and workplace
morale. Our services include consultancy
in areas such as defined contribution
and defined benefit pension schemes,
workplace savings, healthcare, international
benefit solutions and risk benefits, in
addition to the design, implementation and
administration of these schemes.
The Group also offers total reward and
flexible benefit systems, assisting clients to
deliver these to their employees, together
with advice, guidance and financial
education. Changes in legislation and the
uncertainty caused by the recent pandemic,
combined with increased utilisation
of flexible working arrangements, are
increasing the demand for our financial
education and wealth management services
to be delivered through employers.
The provision of bespoke investment
advice sits at the heart of our investment
proposition. The Group’s investment
services include discretionary portfolio
management and in meeting our clients’
needs we use third-parties’ investment
funds, but where we have a particular
expertise we look to meet those needs
in-house. This approach has led to the
development of our internal investment
management function and a range of
products designed to meet our clients’
needs, including a range of multi-
asset funds that have received external
recognition as well as providing direct UK
equity management. In the last year, we
launched the Mattioli Woods Responsible
Equity and Property Securities funds in
response to client demand. These are
complemented by our alternative asset
investments managed by the Group’s
subsidiaries, Maven Capital Partners UK
LLP (“Maven”) and Custodian Capital
Limited (“Custodian Capital”), and the funds
managed by our associate company Amati
Global Investors Limited. Where appropriate,
we intend to expand upon these offerings to
enhance the investment proposition for our
clients and drive further organic growth.
Private equity asset management
The completion of our acquisition of Maven,
a leading private equity and alternative asset
manager, represents a new and exciting
opportunity to enhance the Group’s
investment offering and widen distribution
of the enlarged Group’s products and
services, including our range of VCTs,
infrastructure funds and private equity
investment opportunities.
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Chair’s statement
Looking forward to the future with
confidence and enthusiasm
I am delighted to have been appointed
the Chair of Mattioli Woods.
I look forward to continuing to work
collaboratively with our leadership
teams to enter the next phase of the
Group’s development and to deliver
our ambitious strategic plan.
David Kiddie
Independent Non-Executive Chair
Our focus remains on delivering great client outcomes and
we have continued to develop our customer and business
propositions, with the majority of our team continuing to work
flexibly with a mix of remote and office-based working. We are
mindful of our social impact and continue to support our various
stakeholders and the local communities in which we operate
through a number of commercial and charitable arrangements.
The Group’s strong revenue and profit growth represents
meaningful progress towards our ambitious medium-term
strategic goals, with profit before tax (“PBT”) up 56.9% to £8.0m
(2021: £5.1m). Excluding the impact of acquisition-related costs
and contingent consideration on acquisitions recognised as
remuneration, adjusted PBT increased by 107.7% to £29.5m
(2021: £14.2m).
The Board is committed to growing the dividend while maintaining
an appropriate level of cover to protect the Group’s financial
position and balance the interests of all stakeholders. Accordingly,
the Board is pleased to propose an increased final dividend of
17.8p per share (2021: 13.5p), making a proposed total dividend
for the year of 26.1p, up 24.3% (2021: 21.0p).
Our strategy
Our medium-term targets to grow revenue to £300m and
achieve EBITDA of £100m, underpinned by total client assets of
£30bn, reflect the Board’s ambitions for the Group. Our strategy
remains focused on achieving sustainable levels of growth that
both enhances value and broaden or deepen our expertise and
services to better serve our clients.
The Group has completed nine acquisitions in the last two years
including our largest two acquisitions of Maven and Ludlow and
maintains a strong pipeline of further acquisition opportunities.
Our clearly defined acquisition criteria are focused on transactions
that deliver positive shareholder returns and extend the Group’s
existing client proposition or add to our distribution capacity and
scale. We will seek to build on our track record of successfully
combining businesses that share the same culture and ethos of
putting clients first, alongside continued organic growth.
This is my first year as Chair of Mattioli Woods,
having been appointed as a Non-Executive
Director at the beginning of 2021. Since
joining the Board, I have seen a step
change in the scale of the Group, driven
by both organic and acquired growth,
and the number of growth opportunities
available to it. I am fortunate to be Chair
of a Group with considerable growth
potential, which truly excites me and the
other members of the Board.
I would like to thank my predecessor, Joanne Lake, recognising
the commitment she made to supporting the firm’s growth and
for her contributions and stewardship of the Board over the last
nine years and wish her the best for her future endeavours.
The development of a new executive team and the enhanced
governance structures we have put in place provide the appropriate
leadership and oversight for the Group’s next phase of development,
where I intend to share my own investment management experience
with the leadership team, so that they may identify further
opportunities to improve the options available for our clients.
For the year ended 31 May 2022, I am pleased to report that Group
revenues grew 72.8% to £108.2m (2021: £62.6m), with strong
organic revenue growth of 10%, despite the difficult market
backdrop throughout the period. Adjusted EBITDA was up 88.4%
to £32.6m (2021: £17.3m), reflecting both continued organic
growth and the positive impact of acquisitions made during the
last two years and after normalising for acquisition-related costs.
The acquisitions of Maven, Richings Financial Management,
Ludlow Wealth Management and Ferguson Financial Management,
together with those businesses acquired in the prior year, contributed
£46.1m of revenue growth. The Group’s organic revenue8 growth
of 10% was driven by increased levels of new business offsetting
the impact of negative market movements on the value of clients’
assets during the year.
8 Total revenues excluding revenue growth from businesses acquired in the last
24 months.
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Our people
I have been incredibly impressed and honoured to witness the
team’s dedication to dealing with our clients’ affairs over the
last year and thank all our staff for their continued enthusiasm,
professionalism and commitment to delivering high levels of
service to our clients despite the challenging times in which
we operate.
Consolidation within the wealth and asset management sector
continues apace, and we continue to assess further acquisition
opportunities, with all potential transactions required to meet our
strict investment criteria and due diligence procedures. We are also
progressing our strategic initiatives, including the development
of our digital platforms and our people, to improve operational
efficiency and create additional capacity.
We remain committed to investing in and developing our staff to
build the expertise and capacity to deliver sustainable growth over
the long term. We maintain a culture that is based on knowledge,
professionalism and diversity, putting clients first and adopting
a team-based, collegiate approach. Retaining the commitment,
integrity, expertise and passion of our people is vital to our success
and remains a priority of the Board.
We are confident in the resilience of our business model. The outlook
for the new financial year remains positive, with revenues continuing
to grow. As previously disclosed, cost inflation and progressing our
strategic initiatives including investment in people and technology are
expected to impact margins in the short term; the latter will position
us to secure future growth in revenue and profits, and to deliver
sustainable shareholder returns over the long term.
We are a business that is here for the long term and we look
forward to the future with confidence and enthusiasm.
David Kiddie
Independent Non-Executive Chair
12 September 2022
Governance and the Board
We recently reviewed our governance framework, putting in place
a new structure that will better enable us to meet the diverse needs
of our clients and other stakeholders and support our further
growth. Further details of these changes, which are designed to
enable appropriate decision-making authority within the advice,
administration and investment pillars of our business, are detailed
in the Corporate governance report.
The Company operates with a balanced Board, which we believe
represents the right governance structure for the business. We strive
for high standards in our corporate governance and disclosure and
have adopted the QCA Corporate Governance Code to facilitate
this. The Board remains committed to developing the corporate
governance and management structures of the Group to ensure
they continue to meet the changing needs of the business.
Shareholders
During the year we have engaged with our shareholders
through traditional face-to-face meetings, when permitted,
and through virtual channels including webinars and group
meetings. We are fortunate to have a group of supportive
institutional shareholders with a significant investment in
the Company and welcome the opportunity to talk to all our
shareholders. We will continue to maintain a regular and
constructive dialogue with our shareholders, while seeking
to further broaden our shareholder base.
Outlook
The Board is pleased by the Group’s performance in the year.
We expect the difficult macroeconomic conditions to sustain an
increased demand for advice from clients, underpinning further
growth in our pensions and advice business.
The spectre of rising inflation typically represents an opportunity
for further investment inflows as existing and prospective mass-
affluent clients consider appropriately investing surplus cash to
avoid suffering an erosion in value of savings in real terms. We
expect inflationary pressures to further impact employment costs,
professional costs and office costs across our business, and the
Board intends to take a rigorous and proactive approach to the
management of these costs while retaining operational flexibility,
strength and depth for the long-term benefit of all stakeholders.
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Honorary recognition
University of
Leicester awards
honorary degree
to Mattioli Woods
co-founder
Ian Mattioli MBE
While it is nice to receive
personal recognition and a
massive thanks to Leicester
University, it is often the work
of the people around you
that enable such things to
happen. My advice, as I said
at the ceremony, was for us
all to surround ourselves with
people who are equally expert,
passionate and have integrity. I
am lucky that both in my family
life and business I have been able
to achieve this aim and in doing
so all our combined ambitions
are able to be achieved.
Ian Mattioli MBE
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Ian Mattioli MBE, one of the founders
of wealth management and employee
benefits provider Mattioli Woods, has
been awarded an honorary degree by
the University of Leicester.
Ian was conferred a Doctorate of Laws for his successful
business career and philanthropy, he has worked
meticulously to give back to local and national causes since
he co-founded Mattioli Woods over 30 years ago with
Bob Woods MBE.
He received his honorary degree at the University’s
graduation ceremony at De Montfort Hall on Tuesday 19
July 2022 in front of hundreds of graduating students and
friends. He was among five other stars from the world of
research, business and entertainment.
His enthusiasm and drive has encouraged everyone at
Mattioli Woods to work with charities including the British
Heart Foundation and LOROS Hospice. In addition, Ian and
his wife privately set up The Ian and Clare Mattioli
Charitable Trust, working on recent projects including
Leicester’s Warning Zone, Microloan Foundation Malawi,
Aylestone Park Football Club, who saw their new 500 seat
grandstand open thanks to money from the Trust, and
more latterly helping Leicester Riders build a new arena.
In his speech, Ian gave four pieces of advice; always care,
be passionate, be the expert, surround yourself with great
family, great friends and people who have the same passions
and beliefs.
Photo credit: REDPIX Photography
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Chief Executive’s review
Commitment to
putting clients first
Our success has been based upon
the delivery of quality advice, growing
our clients’ assets and enhancing their
financial outcomes. We continue to
enjoy strong, intergenerational client
retention and we have seen sustained
demand for advice from clients through
the year against an uncertain backdrop.
Ian Mattioli MBE
Chief Executive Officer
Adjusted EBITDA was up 88.4% to £32.6m (2021: £17.3m) and
adjusted EBITDA margin increased to 30.1% (2021: 27.7%) due to a
change in revenue mix following the acquisitions made during the
year and close management of administrative expenditure.
The profit margins achieved for the year support our path to our
longer-term targets. We are working to realise the economies of
scale and operational efficiencies that our responsibly integrated
model offers, while seeking ways to reduce clients’ costs. As
previously announced, despite some short-term impact to
margins, further investment in our platform infrastructure will
allow us to improve client outcomes and experience, and to
realise operational efficiencies.
Our success has been based upon the delivery of quality
advice, growing our clients’ assets and enhancing their financial
outcomes. We enjoy strong, intergenerational client retention and
throughout the year we saw sustained demand for advice from
clients against a difficult market backdrop. We expect a continued
demand for advice driven by working and lifestyle changes,
the impact of the pandemic on financial planning matters, an
uncertain investment environment, increasing longevity, tax and
other legislative changes, where navigating these headwinds
becomes ever more complex.
We continue to focus on delivering investment performance
across both portfolios and funds. Despite continued market
uncertainty, gross discretionary assets under management (“AuM”)
by the Group and its associate increased to £5.1bn (2021: £4.1bn)
following the acquisition of Maven in July 2021 and aggregate net
inflows (before market movements) of £341.4m (2021: £452.9m)
into the Group’s bespoke investment services. This includes an
increase in the value of properties held within CREIT by £119.6m
(2021: £53.5m) to £527.6m.
The value of assets held within our discretionary portfolio
management (“DPM”) service increased by 17.9% to £2.5bn (2021:
£2.1bn), of which £144.3m or 5.7% (2021: £144.0m or 6.7%) is
invested within funds managed by the Group and its associate. We
plan to continue developing new products and services to better
meet our clients’ and external investors’ needs, using the best of
what we have and the best of what other providers can offer as
appropriate. This was shown in the year through the launch of the
Mattioli Woods Responsible Equity and Property Securities funds
which had grown to £62.2m and £7.2m respectively at the year end.
The last financial year was another
turbulent period for clients, which served
to reinforce our commitment to putting
clients first, developing our service
offering and building a business that is
sustainable and resilient over the long
term. I am pleased to report this approach
delivered strong revenue and profit growth,
representing meaningful progress towards
our ambitious strategic goals.
The Group’s revenue grew 72.8% to £108.2m (2021: £62.6m),
reflecting the positive contribution of recent acquisitions combined
with 10.0% organic growth in our core business, with increased levels
of new business offsetting the impact of negative market movements
on the value of clients’ assets.
The growing momentum of new business generation we saw in
the first half continued into the second half of the year, despite the
uncertain market backdrop. A total of 1,084 (2021: 898) new SIPP,
SSAS and personal clients with assets totalling £212m (2021: £239m)
chose to use Mattioli Woods during the year, representing 20.7%
growth. Our investment in technology has enabled us to host virtual
client meetings in addition to client and introducer webinars, which
continue to attract larger numbers of attendees than our traditional
in-person seminars, which we have reintroduced for those people
who prefer face-to-face meetings following the easing of the
pandemic restrictions.
Operating profit before financing grew 73.8% to £7.3m (2021: £4.2m)
and profit before tax was up 56.9% to £8.0m (2021: £5.1m). Adjusted
profit before tax of £29.5m and up 107.7%, was primarily driven by
the contribution of recent acquisitions and further enhanced by
an increased share of profit of £1.6m (2021: £1.1m) from our 49%
associate Amati, which had £1.1bn of assets under management at
the year end. This is a significant increase from when we acquired
our interest in the business with AuM of £120m. Amati’s strong
investment performance continues to be recognised, with the Amati
AIM VCT winning the VCT AIM Quoted Category at Investment
Week’s Investment Company of the Year Awards 2021 and the Amati
UK Smaller Companies Fund being highly commended at the Fund
Manager of the Year Awards 2021.
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Market overview
Mattioli Woods operates within the UK’s financial services industry,
which is subject to the effects of movements in financial markets,
economic conditions and regulatory changes. Our markets are
highly fragmented and remain competitive, serviced by a wide
range of suppliers offering diverse services to both individual
and corporate clients.
The UK retail savings and investment market has demonstrated
considerable growth in recent years. It remains dominated by pension
schemes but is evolving as a result of societal, economic, regulatory
and technological changes. More than a decade of low interest rates
and evolving client preferences, including environmental, social and
governance (“ESG”) and responsible investing considerations, has
created challenges for people seeking to generate income while
preserving and growing their capital.
At the same time, the recent pandemic and subsequent events
have created an uncertain market backdrop that has heightened
awareness of the gap between the current level of UK savings and
that which is necessary to provide a reasonable standard of living
in adverse circumstances or during retirement. It has also served
to highlight the general under-provision in the level of protection
policies established to ensure that individuals, their families and their
dependents are sheltered from the impact of adverse life events.
Employers continue to withdraw from defined benefit pension
schemes, requiring individuals to be self-reliant in planning for
their own long-term needs. Individuals who have generated
substantial personal and family wealth are increasingly seeking
solutions that help them fulfil their personal ambitions.
We believe these current market dynamics will continue driving
demand for the holistic planning and expert advice we provide.
Regulation
The Executive Director of Supervision at the Financial Conduct
Authority (“FCA”) set out the regulator’s priorities and long-term
expectations for the wealth management and advice industry in
June this year. The focus is on firms’ operational and financial
resilience, including the preservation of client assets and
money, and it expects firms to take reasonable steps to ensure
they continue to meet the challenges the pandemic poses to
customers and staff, particularly through their business
continuity plans.
This is expected to be expanded by the introduction of a new
Principle, the Consumer Duty, whereby “A firm must act to deliver
good outcomes for retail customers”. These requirements are
intended to ensure our clients understand what products and
services they are paying for, why these are appropriate for them
and that the Company is cognisant of the cost and value of
products and services we recommend. All the new requirements
accord with our principles of integrity, professionalism and having
a client-focused culture.
As regulators focus on protecting consumers, legislation is
becoming increasingly stringent and the level of public scrutiny on
conduct and cost is increasing, with clients able to view the cost of
the services they receive more easily following the introduction of
the Markets in Financial Instruments Directive II (“MiFID II”).
The new Investment Firm Prudential Regime (“IFPR”) for UK
investment firms authorised under UK MiFID brings significant
changes, such that UK investment firms are now subject to
liquidity requirements across the board, a new methodology
for calculating capital requirements plus new remuneration and
disclosure requirements.
Changes to the tax regime
The Chancellor’s March 2021 budget announced a rise in
corporation tax for businesses with profits above £250,000 to
move to 25% from 2023, with profits between £50,000 and
£250,000 taxed on a tapered scale. The current Conservative
Party leadership contest has created uncertainty around the
future direction of tax rates, but if implemented, we expect the
rise in corporation tax will increase the Group’s effective tax
rate in future years.
For our clients, there remain many opportunities to manage their
tax positions effectively, with any future changes in the tax regime
expected to create further demand for our financial planning and
advisory services.
Outlook
Investment markets are likely to remain volatile for some
time, although the spectre of rising inflation typically creates
an opportunity for further investment inflows as existing and
prospective clients consider appropriately investing surplus cash
to avoid suffering an erosion in value of savings in real terms. In
response to the continued inflationary pressures on costs, as
expected the Group intends to maintain a rigorous and proactive
approach to the management of costs, abiding by the principles of
not spending on anything considered non-essential, with examples
including the rationalisation of our office footprint, recruiting only
where necessary and negotiating all professional costs.
Unsettled times typically create significant advice opportunities for
Mattioli Woods given our diverse revenue streams, as people seek
to take charge of their financial affairs and protect their own and
their families’ wealth. We will continue to seek to understand our
clients’ needs and provide quality solutions, maintaining our focus
on client service and continuing to adapt our business model to
the changing market, integrating asset management and financial
planning to build upon our established reputation for delivering
sound advice and consistent investment performance.
Our services
Our core pension and wealth management offering currently
serves a wide demographic cross-section including affluent
families and the higher end of the market, including controlling
directors and owner-managed businesses, professionals,
executives and retirees.
We intend to extend our reach to new client demographics as we
develop both our investment and product propositions, including
our partnership with the Tiller Group Limited to develop a self-
directed investment platform for new and existing clients. The
revenue mix of the Group’s five operating segments changed as
follows during the year, principally driven by the impact of recent
acquisitions on total Group revenue:
• 46.6% investment and asset management (2021: 53.3%);
• 24.2% private equity asset management (2021: nil);
• 18.2% pension consultancy and administration (2021: 30.1%);
• 5.8% property management (2021: 7.8%); and
• 5.2% employee benefits (2021: 8.8%).
Mattioli Woods plc Annual Report 2022F 14
S
Chief Executive’s review continued
We aim to operate a seamless structure, allowing us to cover
all aspects of financial planning, wealth management and
employee benefits. Our key objectives are:
• Maintaining long-term relationships and delivering great
outcomes for our clients;
• Proactively anticipating our clients’ needs to deliver on their
expectations;
• Investing in our people and technology to service greater
business volumes with increased operational efficiency
at a lower cost;
• Sharing knowledge and ideas between ourselves and others
for mutual benefit;
• Developing our market standing through the integrity and
expertise of our people;
• Extending our range of products and services, seeking
to attract new clients both organically and via strategic
acquisitions; and
• Being proud of our charitable and community spirit,
supporting staff and local and national charities.
Mattioli Woods plc Annual Report 2022 S
G
15
Through truly holistic financial
planning, I help our clients achieve
their financial goals, ambitions
and dream lifestyle.
William Amps
Consultant
• A £95.6m decrease (2021: £677.6m increase) in Amati’s
funds under management (excluding Mattioli Woods’ client
investments), primarily due to market falls reducing funds within
the TB Amati UK Smaller Companies Fund to £840.3m (2021:
£980.9m), partially offset by positive growth in the TB Amati
Strategic Metals Fund to £77.6m (2021: £25.1m). The TB Amati
Strategic Innovation Fund was launched in May 2022 and had
raised £1.1m at the year end with further growth anticipated; and
• £766.9m of assets added as a result of the acquisition of Maven.
During the year Maven generated £6.9m of performance fees
from successful fund, VCT and investor partner exits, highlighting
the quality of its investment proposition and further supporting
the acquisition rationale.
Assets under management, administration and advice
Unlike many wealth managers, almost half the Group’s revenues
are fee-based, rather than being linked to the value of assets under
management, administration or advice9, giving our business a resilient
revenue profile that is less sensitive to market performance. The
acquisitions of Maven, Richings and Ludlow during the year added
£2.6bn of client assets, with total client assets of the Group and its
associate of £14.9bn at 31 May 2022 (2021: £12.1bn), summarised in
Table 1 below.
Our DPM service and the four multi-asset funds forming the
backbone of this continued to perform well under volatile market
conditions, with aggregate net inflows of over £341.4m as shown
in the table on page 20 into this and the Group’s other bespoke
investment services during the year. The movement in total client
assets is analysed as follows:
• A £172.2m increase (2021: £712.0m) in SIPP and SSAS assets
under administration driven by a 0.1% increase (2021: 1.3%
increase) in the number of schemes being administered at the
year end, comprising a 2.7% increase (2021: 7.1% increase) in the
number of direct13 schemes to 7,098 (2021: 6,912) and a 4.2%
decrease (2021: 7.2% decrease) in the number of schemes the
Group operates on an administration-only basis to 3,986 (2021:
4,159). In recent years, we have been appointed to operate or
wind-up several SIPP portfolios following the failure of their
previous operators, with the lower number of schemes due
in part to the transfer of certain members of these distressed
portfolios to more appropriate arrangements;
• A £0.6m increase (2021: £428.0m) in the value of assets held in
the corporate pension schemes advised by our employee benefits
business. These revenues are not linked to the value of client assets
in the way that certain of our wealth management revenue streams
are, although market performance and economic uncertainty can
impact clients’ ability to increase investment in their schemes. Our
corporate client portfolio remains well diversified;
• A £1,936.3m increase (2021: £1,005.5m) in personal wealth
and other assets under management and advice, with the
acquisitions of Ludlow Wealth Management Group Limited and
Richings Financial Management Limited in the period contributing
£1,861.4m of the increase. The 511 (2021: 422) new personal
clients14 won during the year were partially offset by some natural
client attrition, with the addition of acquired clients resulting in
a 44.5% increase (2021: 23.3% increase) in the total number of
personal clients15 to 10,506 (2021: 7,270);
Table 1
Assets under management,
administration and advice10
At 1 June 2021
Acquisition during the year
Net inflows/(outflows),
including market movements
Personal
wealth
SIPP and Employee and other
assets
£m
SSAS11 benefits
£m
£m
Sub-total
£m
Amati12 Maven
£m
£m
Total
£m
6,741.1
–
1,452.1
–
2,734.2
1,861.4
10,927.4
1,861.4
1,196.1
–
–
747.9
12,123.5
2,609.3
172.2
0.7
74.8
247.6
(95.6)
19.0
171.1
At 31 May 2022
6,913.3
1,452.8
4,670.4
13,036.4 1,100.5
766.9
14,903.9
9 Revenue for the year ended 31 May 2022 was split 48% (2021: 54%) fixed, initial or time-based fees and 52% (2021: 46%)
ad valorem fees based on the value of assets under management, advice and administration.
10 Certain pension scheme assets, including clients’ own commercial properties, are only subject to a statutory valuation
at a benefit crystallisation event.
11 Value of funds under trusteeship in SIPP and SSAS schemes administered by Mattioli Woods and its subsidiaries.
12 Assets under management of
£1,100.5m (2021: £1,196.0m)
excludes £93.6m (2021: £94.9m)
of Mattioli Woods’ client investment
included within SIPP and SSAS,
employee benefits and personal
wealth and other assets and
excludes £14.8m (2021: £17.2m) of
crossholdings between the TB Amati
Smaller Companies Fund, TB Amati
Strategic Metals Fund and the Amati
AIM VCT plc.
13 SIPP and SSAS schemes where the
Group acts as pension consultant
and administrator. SIPP and SSAS
schemes administered by SSAS
Solutions reclassified as direct
during the year.
14 New personal clients includes
from acquired businesses.
15
Includes personal wealth clients with
SIPP and SSAS schemes operated by
third parties.
Mattioli Woods plc Annual Report 2022F
16
S
Chief Executive’s review continued
Key performance indicators
The Directors consider the key performance indicators (“KPIs”) for the Group are as follows:
Strategy/objective
Performance indicator
Organic growth and growth
by acquisition
Revenue – total income (excluding VAT) from all
revenue streams.
Operating efficiency
Shareholder value and financial
performance
Adjusted EBITDA margin – profit generated from the
Group’s operating activities before financing income or
costs, taxation, depreciation, amortisation, impairment,
gains on bargain purchases, deferred consideration
recognised as remuneration and acquisition-related costs,
including share of profit from associates (net of tax),
divided by revenue.
Adjusted earnings per share (“EPS”) – total
comprehensive income for the year, net of taxation,
attributable to equity holders of the Company, adjusted
to add back acquisition-related costs, acquisition-related
finance costs, the amortisation of acquired intangible
assets, gains on bargain purchases and deferred
consideration recognised as remuneration divided by the
weighted average number of ordinary shares in issue.
Growth in the value of assets
under management, administration
and advice
Assets under management, administration and advice
– the value of all client assets the business gives advice
upon, manages or administers.
Excellent client service
and retention
Client attrition – the number of direct SSAS and SIPP
schemes lost as a result of death, annuity purchase,
external transfer or cancellation as a percentage of
average scheme numbers during the period.
Financial stability
Debtors’ days – this is the average number of days’ sales
outstanding in trade receivables at any time.
Surplus on regulatory capital requirement – this is
the aggregate surplus on the total regulatory capital
requirement of the Group.
Further
explanation and
figures
See ‘Our business model’ and ‘Revenue’
04 19
See ‘Profitability and earnings per share’
22
21
See ‘Profitability and earnings per share’
22
21
See ‘Assets under management,
administration and advice’
17
16
See ‘Segmental review’
25
See ‘Cash flow’
24
23
See ‘Regulatory capital’
25
24
Mattioli Woods plc Annual Report 2022 Financial performance
and future developments
Alternative performance measures
The Group has identified certain measures that it believes will assist
in the understanding of the performance of the business. Recurring
revenues, organic revenues, adjusted EBITDA, adjusted profit
before tax (“adjusted PBT”), adjusted profit after tax (“adjusted PAT”),
adjusted EPS and adjusted cash generated from operations are non-
GAAP alternative performance measures, considered by the Board
to provide additional insight into business performance compared
with reporting the Group’s results on a statutory basis only.
Accounting standards require the contingent consideration
payable on certain acquisitions to be recognised as an expense
in the income statement rather than as a capital payment. On
certain acquisitions, the Board has included employment-related
conditions for the payment of contingent consideration to protect
shareholder value. While the Board accepts this is the required
treatment for its reported results, adjusted measures of the Group’s
profitability, including adjusted EBITDA, adjusted PBT, adjusted PAT
and adjusted EPS, have been amended to add back items including
£3.7m of acquisition-related costs and £9.7m of contingent
consideration recognised as remuneration.
These alternative performance measures may not be directly
comparable with other companies’ adjusted measures and are not
intended to be a substitute for, or superior to, any IFRS measures of
performance. However, the Board considers them to be important
measures for assessing underlying performance, used widely within
the business and by research analysts covering the Company.
Supporting calculations for alternative performance measures and
reconciliations between alternative performance measures and their
IFRS equivalents are set out in the Alternative performance measure
workings section of the Annual Report.
Revenue
Group revenue was up 72.8% to £108.2m (2021: £62.6m), reflecting
the contribution of recent acquisitions and 10.0% organic growth
(2021: 2.9% reduction), with the increased levels of new business
offsetting the impact of negative market movements on the value
of client assets.
Revenue grew across all business segments, with growth in
investment and asset management revenues driven by aggregate
net inflows (before market movements) of £341.4m (2021: £452.9m)
into the Group’s bespoke investment services. This, together with
the addition of private equity management fees following the
acquisition of Maven, increased revenues linked to the value of
clients’ assets to 52% (2021: 46%) of total revenues.
We continue to focus on delivering great client outcomes and
addressing their evolving needs. In addition to increasing client
caseloads within our consultancy and administration teams through
improved operating efficiency, we are working to streamline and
automate our administration processes through initiatives like the
adoption of electronic signatures, creating a scalable operating
model and making Mattioli Woods easier to do business with. Over
time, we anticipate these changes will deliver improved margins and
cost savings for both us and our clients.
Employee benefits expense
As in previous years, the major component of the Group’s operating
costs is our employee benefits expense of £59.6m (2021: £34.1m)
representing 55.1% of revenue (2021: 54.5%), with the increase
including £20.9m employee benefits expense at businesses
acquired during the year and discretionary staff bonuses totalling
£6.6m (2021: £3.1m) and deferred consideration presented as
remuneration of £9.7m (2021: £3.8m).
S
G
17
Employee
engagement
Using the Wotter app, we are
now able to monitor employee
satisfaction throughout the year,
with weekly inputs from our
employees offering greater and
more current insight than an
employee annual survey. Wotter
scores companies’ employee
engagement on six pillars:
Loyalty
Leadership
Trust
Collaboration
Professional wellbeing
Personal wellbeing
Based on initial findings, certain
areas we are striving to improve
for employees include easier
access to training and improving
communication at all levels as the
breadth and depth of the business
continues to grow. Also flagged
were pressures felt by employees
as the business grows in size and
complexity, and pay and benefits
against a backdrop of inflation and
increasing costs of living.
The Group’s total headcount increased to 847 (2021: 663) as at 31
May 2022, with retention of the experienced teams at each of the
acquired businesses adding 154 staff. The number of consultants
increased to 185 (2021: 139) as we continued to train and recruit
new consultants as well as experienced consultants to expand upon
our distribution network.
As previously announced, we continue to invest in building capacity
across our IT, administration and compliance teams, with further
investment in training across all parts of the Group.
Other administrative expenses
Other administrative expenses increased to £19.8m (2021:
£13.3m), with £3.7m (2021: £2.6m) of costs incurred on the
acquisitions completed or aborted during the year. Other
overheads, including the regulatory fees and levies incurred by the
Group, were broadly in line with the prior year with cost inflation
partially offset by cost savings in marketing, travel and premises
costs. Management have been monitoring costs closely and plan
to mitigate increases where possible.
Mattioli Woods plc Annual Report 2022F 18
S
Chief Executive’s review continued
Financial performance and future
developments continued
Share-based payments
Share-based payments costs of £1.7m (2021: £1.5m) represent
the cost of options expected to vest under the Company’s long-
term incentive plans and the cost of matching shares awarded to
employees under the Company’s Share Incentive Plan.
Adjusted PBT, adjusted PAT and adjusted EPS are additional
measures the Board considers to be relevant for investors who
want to understand the underlying earnings of the Group, excluding
items that are non-cash or affect comparability between periods
in Table 3.
Net finance costs
The Group has maintained a positive net cash position throughout
the year, with increased net finance costs of £0.9m (2021: £0.2m)
reflecting credit interest of £0.08m (2021: £0.03m) offset by
£0.9m (2021: £0.1m) of non-cash notional finance charges on
the unwinding of discounts on long-term provisions and £0.1m
(2021: £0.1m) of interest on the lease liabilities recognised under
International Financial Reporting Standard (“IFRS”) 16.
Taxation
The effective rate of taxation on reported profit on ordinary
activities was 49.1% (2021: 73.0%), above the standard rate of tax
of 19.0% (2021: 19.0%). This is primarily due to significant non-
deductible expenses from contingent and transaction specific
consideration arrangements accounted for as remuneration and
acquisition-related fees. In addition, certain expenses associated
with sponsorship and other business development activities were
not deductible for tax purposes.
The net deferred taxation liability carried forward at 31 May 2022
was £26.7m (2021: £8.5m).
Profitability and earnings per share
Profit before tax was up 56.9% to £8.0m (2021: £5.1m), with adjusted
profit before tax up 107.7% to £29.5m (2021: £14.2m). The increased
revenues were partially offset by the impact on employee benefits
expense of the businesses acquired during the last two years, and
increased discretionary staff bonuses, professional fees, insurance
and acquisition-related costs. These changes translated into an
increase in operating profit before financing of 73.8% to £7.3m
(2021: £4.2m) and adjusted EBITDA up 88.4% to £32.6m (2021:
£17.3m), with adjusted EBITDA margin of 30.1% (2021: 27.7%).
The Board considers adjusted EBITDA to be a relevant measure for
investors who want to understand the underlying profitability of the
Group, adjusting for items that are non-cash or affect comparability
between periods in Table 2.
As explained in Note 17, client portfolios and brands acquired
through business combinations are recognised as intangible assets.
The amortisation charge for the year of £7.2m (2021: £2.8m)
associated with these intangible assets has been excluded from
adjusted PAT and adjusted EPS because the Board reviews the
performance of the business before these charges, which are non-
cash and do not apply evenly to all business units.
Adjusted EPS18 was up 17.5% to 48.3p (2021: 41.1p), while basic EPS
was up 62.7% to 8.3p (2021: 5.1p), driven by the positive impact of
recent acquisitions and organic growth. EPS was also impacted by
a higher effective tax rate of 49.1% (2021: 73.0%) and the issue of
489,788 (2021: 340,788) shares under the Company’s share plans.
During the year, 5,325,705 (2021: 970,409) shares were issued as
consideration for acquisitions, with 16,969,697 (2021: nil) shares
issued via a placing. Diluted EPS was 8.3p (2021: 5.1p).
Dividends
The Board is pleased to recommend a final dividend of 17.8p per
share (2021: 13.5p). This makes a proposed total dividend for the
year of 26.1p (2021: 21.0p), a year-on-year increase of 24.3% (2021:
5.0%), demonstrating our desire to deliver value to shareholders and
confidence in the outlook for our business.
The Board remains committed to growing the dividend, while
maintaining an appropriate level of dividend cover. If approved, the
final dividend will be paid on 3 November 2022 to shareholders on
the register at the close of business on 23 September 2022, with an
ex-dividend date of 22 September 2022.
The Company offers its UK, Channel Islands and Isle of Man resident
shareholders the option to invest their dividends in a Dividend
Reinvestment Plan (“DRIP”). The DRIP is administered by the
Company’s registrar, Link Group (“Link”), which uses cash dividend
payments to which participants in the DRIP are entitled to purchase
shares in the market, which means the Company does not need to
issue new shares and avoids diluting existing shareholdings.
For the DRIP to apply to the proposed final dividend for the year
ended 31 May 2022, shareholders’ instructions must be received by
Link by close of business on 13 October 2022.
Table 2
Statutory operating profit before financing
Amortisation of acquired intangibles
Amortisation of software
Depreciation
EBITDA 16
Share of associate profits (net of tax)
Acquisition-related costs
Gain on bargain purchase
Deferred consideration as remuneration
Adjusted EBITDA 17
16 Earnings before interest, taxation, depreciation,
amortisation and impairment.
17 Figures in table may not add due to rounding.
18 Before acquisition-related costs, amortisation and
impairment of acquired intangibles, gain on bargain
purchase, deferred consideration as remuneration
and acquisition-related finance costs.
2022
£m
7.3
7.2
0.3
2.8
17.6
1.6
3.7
–
9.7
32.6
2021
£m
4.2
2.8
0.3
2.8
10.1
1.1
2.6
(0.3)
3.8
17.3
Mattioli Woods plc Annual Report 2022
S
G
19
Cash flow
Cash balances at 31 May 2022 totalled £53.9m (2021: £21.9m). Cash
generated from operations was £19.6m or 111% of EBITDA (2021:
£20.4m or 202%), including an increase in the Group’s working
capital requirement20 of £8.9m (2021: £5.2m decrease), comprising:
• A £1.8m increase (2021: £5.0m increase) in trade and other
payables, primarily due to:
- £2.9m increase in accruals and deferred income following an
increase in staff and Directors’ bonuses accrued for the year
ended 31 May 2022, to be paid following the year end;
- £0.7m reduction in other payables relating to the payment
of a balance of initial consideration payable for acquisitions
in 2021; and
- £0.4m reduction across other balances within trade
and other payables.
• A £5.3m increase (2021: £1.0m reduction) in trade
and other receivables, primarily due to:
- £2.7m increase in trade receivables due to significant invoices
raised in subsidiaries Custodian Capital and Maven pre-year end;
- £1.9m increase prepayments and accrued income due to
delayed invoicing of fund management fees in Custodian
Capital; and
- £0.7m increase in other receivables.
• A £5.4m reduction in provisions during the year
(2021: £0.7m decrease), primarily due to:
- £5.9m reduction in provisions for contingent remuneration
following the previous acquisition of SSAS Solutions (UK)
Ltd, Hurley Partners Limited and Pole Arnold Financial
Management Limited; and
- £0.5m increase across other provision balances,
including increases to provisions for client claims.
Adjusted cash generated from operations21, which excludes items
that are incurred as a result of the Group’s acquisition activities,
increased by 43.3% to £31.1m (2021: £21.7m), representing 95%
of Adjusted EBITDA (2021: 125%).
Outstanding trade receivables increased to 37 days (2021: 30 days),
with credit management continuing to be an area of focus, as well
as moving from fee invoicing to deduction of income from clients’
holdings with platform providers where the opportunity arises.
Outstanding trade payables increased to 15 days (2021: 14 days).
Net cash outflows from investing activities increased to £65.3m
(2021: £15.7m) with £64.0m (2021: £13.0m) of initial consideration
paid on acquisitions completed in the period net of cash acquired.
Investing activities also included £1.3m (2021: £2.7m) of other
investments, including an increased stake in the Group’s technology
partner Tiller and the acquisition of the client portfolio of Ferguson
Financial Management Limited.
Net cash from financing activities resulted in an £81.0m inflow
(2021: £6.2m outflow), with proceeds from the issue of share
capital of £109.4m (2021: £0.6m) following the placing of new
ordinary shares in June 2021. This inflow was partially offset by
the repayment of Ludlow’s borrowings post-acquisition of £15.9m
(2021: £nil) and dividends paid of £11.0m (2021: £5.7m) driven by
the increased number of shares in issue following the placing and
the dividend per share paid increasing in line with the Group’s
progressive dividend policy.
Regulatory capital
The Group and Company continue to enjoy significant
headroom on their regulatory capital and liquidity requirements,
with completion of the fundraise in June 2021 allowing the
Group to continue pursuing further acquisition opportunities.
The Group’s regulatory capital requirements have increased as
a result of further growth and diversification of its activities in
recent years. In addition, the Group’s capital is reduced when it
makes acquisitions due to the requirement for intangible assets
arising on consolidation in the Group’s accounts, or investments
in subsidiaries in the Company’s accounts, to be deducted from
Common Equity Tier 1 (“CET1”) Capital.
In January 2022, following the introduction of the Investment Firm
Prudential Regime (“IFPR”), the value of the Group’s CET1 Capital
was reduced due to the removal of reliefs on deduction of deferred
tax assets and significant investments in financial services entities
that were available under the previous regime. The Company
has obtained approval from the FCA for the application of the
Group Capital Test, which allows investment firms relief from
some of the prudential consolidation requirements. This is a more
straightforward capital treatment where the parent simply needs
to hold enough regulatory capital to support its capital investment
in its subsidiaries.
19 Figures in table may not add due to rounding.
20 Working capital defined as trade and other
receivables less trade and other payables.
21 Cash generated from operations before acquisition-
related costs paid and contingent remuneration paid.
Table 3
Statutory profit before tax
Income tax expense
Other comprehensive income
Total comprehensive income / Basic EPS
Statutory profit before tax
Amortisation of acquired intangibles
Acquisition-related costs
Acquisition-related notional finance cost
Gain on bargain purchase
Deferred consideration as remuneration
Adjusted PBT
Income tax expense at standard rate
Adjusted PAT / Adjusted EPS19
Profit
2022
£m
8.0
(3.9)
–
4.1
8.0
7.2
3.7
0.9
–
9.7
29.5
(5.6)
23.9
EPS
2022
pps
16.2
(7.8)
–
8.3
16.2
14.6
7.5
1.8
–
19.6
59.6
(11.3)
48.3
Profit
2021
£m
5.1
(3.8)
–
1.4
5.1
2.8
2.6
0.1
(0.3)
3.8
14.2
(2.7)
11.5
EPS
2021
pps
18.4
(13.4)
0.1
5.1
18.4
9.9
9.3
0.5
(1.0)
13.6
50.7
(9.6)
41.1
Mattioli Woods plc Annual Report 2022F
20
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Chief Executive’s review continued
Financial performance and future
developments continued
Segmental review
Investment and asset management
The Group’s gross discretionary assets, including the multi-asset
funds that sit at the heart of our DPM service, Custodian REIT, the
Mattioli Woods Property Securities and Responsible Equity funds,
the funds managed by Maven and the Group’s associate company,
Amati, totalled £5.1bn (2021: £4.1bn) at the year end including
£341.4 net inflows, with movements during the year shown in
Table 4 below.
Investment and asset management revenues generated from the
Group’s investment services, which include advising clients on
both pension and personal investments, our DPM service and
management of multi-asset and other specialist funds, increased
51% to £50.5m (2021: £33.4m). Fees for services provided by the
Group’s subsidiary Custodian Capital to Custodian REIT are included
in the ‘Property management’ segment, with fees generated by
the Group’s subsidiary Maven included in the ‘Private equity asset
management’ segment.
Income from both initial and ongoing portfolio management
charges increased to £26.4m (2021: £23.1m), with £482.8m
(2021: £204.2m) of inflows into our DPM service during the year.
Annual management charges on the Mattioli Woods Structured
Products Fund (“MTW SPF”) and individual structured plans were
£0.4m (2021: £1.1m), with the reduction in revenues due to the
wind-down of the MTW SPF during the year partially offset by the
release of four individual plans in the year totalling £9.3m.
Adviser charges based on gross assets under advice of £3.5bn
(2021: £2.6bn) increased to £20.9m (2021: £9.0m), driven by the
revenue contribution from acquisitions in the year with gross assets
under advice of £1.8bn.
While growth in total assets under management and advice
continues to enhance the quality of earnings through an increase
in recurring revenues, the proportion of the Group’s total revenues
which are recurring reduced to 86.5% (2021: 92.7%) due to the
exceptional performance of Maven in generating non-recurring
but repeatable income of £8.9m, including £6.9m of performance
and exit fees from VCT and investor partner transactions.
As with other wealth and asset management firms, these income
streams are linked to the value of funds under management and
advice, and are therefore affected by the performance of financial
markets, with the negative impact of market movements on the
value of client assets more than offset by the impact of acquisitions
and positive net inflows during the year.
Pension consultancy and administration
Pension consultancy and administration revenues were up 4.8%
to £19.7m (2021: £18.8m), with a total of 11,084 (2021: 11,071) SIPP
and SSAS schemes administered by the Group, following a 2.7%
increase in the number of advised pensions being offset by an
expected (4.2%) reduction in the number of schemes operated on
an administration-only basis. Client activity returned to close to pre-
pandemic levels, supporting the growth in revenue.
Direct26 pension consultancy and administration fees increased 7.3%
to £16.1m (2021: £15.0m). Retirement planning remains central to
many of our clients’ wealth management strategies and the number
of direct schemes increased to 7,098 (2021: 6,912), with 448 new
schemes gained in the year (2021: 408). Our focus remains on the
quality of new business, with the value of a new scheme averaging
£0.3m (2021: £0.3m). We continue to enjoy strong client retention,
with a slight decrease in the external loss rate27 to 2.1% (2021: 2.3%)
and the overall attrition rate28 remaining at 3.4% (2021: 3.4%).
The number of SSAS and SIPP schemes the Group operates on
an administration-only basis fell to 3,986 (2021: 4,159) at the year
end. In prior years the Group has been appointed to administer a
number of SIPPs following the previous operators’ failure. Work
continues in connection with schemes previously administered by
Stadia Trustees Limited, HD Administrators, Pilgrim Trustees Services
Limited and The Freedom SIPP Limited, with a 4.8% fall in scheme
numbers reducing third-party administration fees to £3.6m
(2021: £3.8m).
The Group’s banking revenue was £0.05m (2021: £0.05m) with the
Bank of England’s base rate at a historic low of 0.1% for the first
half of the year, before rising to 1.0% by 31 May 2022. The Group’s
banking revenue is currently expected to be negligible going
forward but is an opportunity for future growth subject to structural
changes in our banking arrangements for clients.
Table 4
Assets under management
Custodian
REIT
£m
DPM
£m
MTW
SPF
£m
At 1 June 2021
2,143.1 408.0
197.5
Acquisitions
Transfers from SPF
Inflows
Outflows
Market movements
–
182.1
482.8
(202.0)
–
–
19.1
–
(78.4) 100.5
–
–
–
(195.1)
(2.3)
MTW
PSF22
£m
–
–
–
61.2
(0.0)
1.0
MTW
REF23
£m
Amati
£m
Maven
£m
Gross
Cross-
AuM holdings
£m
£m
Net
AuM
£m
– 1,308.1
– 4,056.6
(161.2) 3,895.4
–
–
7.6
(0.0)
(0.3)
–
–
270.7
(151.8)
(218.1)
747.9
–
77.1
(28.1)
(25.8)
747.9
182.1
918.4
(577.0)
(223.4)
–
–
747.9
182.1
(8.5) 910.0
(577.0)
(223.4)
–
–
At 31 May 2022
2,527.5
527.6
(0.0)
62.2
7.2 1,208.9
771.1 5,104.6
(169.7) 4,934.9
Crossholdings comprises holdings in DPM24, in Amati25 funds and in other non-DPM crossholdings
22 Mattioli Woods Property Securities Fund.
23 Mattioli Woods Responsible Equities Fund.
24 Comprises £13.5m (2021: £26.6m) in
Custodian REIT, £nil (2021: £44.0m)
in MW SPF, £60.5m (2021: £nil) in
MW PSF and £70.3m (2021: £73.3m)
in Amati funds.
25 Crossholdings between Multi-Asset
Fund (“MAF”): TB Amati Smaller
Companies Fund and the Amati AIM
VCT plc £16.4m (2021: £17.2m) and
non-MAF cross holdings £8.9m
(2021: £nil).
26 SIPP and SSAS schemes where
Mattioli Woods acts as pension
consultant and administrator.
27 Direct schemes lost to an alternative
provider as a percentage of average
scheme numbers during the year.
28 Direct schemes lost as a result of
death, annuity purchase, external
transfer or cancellation as a
percentage of average scheme
numbers during the year.
Mattioli Woods plc Annual Report 2022
S
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21
Property management
Property management revenues were £6.3m (2021: £4.9m),
with Custodian Capital having assets under management and
administration of £618.1m (2021: £516.9m) at 31 May 2022. The
increase in assets under management was driven by significant
commercial property valuation increases, particularly in the
industrial and logistics and retail warehouse sectors, which have
been the key target sectors for Custodian REIT since IPO. Custodian
REIT also issued £19.1m new shares during the period to acquire
DRUM Income Plus REIT plc at a 28% discount to its net asset value,
demonstrating Custodian Capital’s ability to deliver successful
corporate consolidation within its peer group.
Recurring annual management charges represented 98.5% (2021:
97.9%) of property management revenues, the majority of which are
derived from Custodian Capital’s services to Custodian REIT.
In addition, Custodian Capital continues to facilitate direct property
ownership on behalf of pension schemes and private clients and
manages our Private Investors Club alternative investments, which
have been provided to suitable clients by way of private investor
syndicates. Following the onset of the pandemic we temporarily
paused the launch of new private investor syndicates due to market
and economic uncertainty at that time. We are in the process of
merging the Private Investors Club into Maven, and although no
new syndicates completed during the current or prior financial year,
since the year end £4.5m has been raised for a new investment and
a number of new opportunities are in the pipeline, which will be
marketed to suitable clients.
Segment margin reduced to 20.5% (2021: 30.8%), primarily due
to new revenue share arrangements for our consultancy team
to ensure we remain competitive in the market.
We anticipate continued regulatory scrutiny of the pension
market, with some other SIPP and SSAS operators in the spotlight
due to issues arising with DB transfers and esoteric or non-
standard investments. However, the market opportunity remains
strong, with SIPP and SSAS arrangements favoured as a way of
allowing individuals to have greater access, control, flexibility and
responsibility over their pension savings. SIPPs are increasingly
the pension vehicle of choice for the mass affluent and we take
great pride in seeing our clients withdrawing funds to enjoy in
their retirement.
Due to the broader market shift away from accumulation and
steady savings, we anticipate there will be some natural outflows
from our clients’ SIPP and SSAS schemes, particularly as the ‘baby
boom’ generation reaches retirement. However, we expect any
such decumulation to have a positive impact on the Group’s results,
with our multi-generational approach, linking our strength in the
provision of advice around the cascading of wealth down through
the generations, inheritance tax and other planning.
Private equity asset management
Revenue in the year totalled £26.2m or 24% of Group revenue,
with Maven’s results recognised from 1 July 2021. Recurring
revenues of £17.6m were supplemented by £8.5m of non-recurring
but repeatable revenues primarily generated from fund, VCT
and investor partner performance and exit fees in the period,
highlighting the quality of Maven’s investment team and further
supporting the acquisition rationale.
Maven’s trading for the year was ahead of our expectations,
partly driven by delivery of some revenue and cost synergies.
A few months after completion of the Maven acquisition, the
Group completed its first co-investment between qualifying
Mattioli Woods and Maven clients, which was oversubscribed.
The Group has a pipeline of further co-investment opportunities to
launch in the coming year, which will enable both the Maven team
to access the significant distribution network of Mattioli Woods,
and Mattioli Woods clients access to the range of investment
opportunities offered by Maven.
Mattioli Woods plc Annual Report 2022F
22
S
Chief Executive’s review continued
Financial performance and future
developments continued
The most enjoyable part of my job is
spending time with my clients. I have
looked after many of them for over 10
years and they really are part of the family.
April Ritchie
Consultant, Scotland
Employee benefits
Employee benefits revenues were £5.7m (2021: £5.5m), with
positive market conditions driven in part by the post-pandemic
recovery. New client wins were up, alongside increased uptake of
strategic benefit consultancy projects from existing clients. This
was supported by strong client retention throughout the year and
accretion in premiums for risk and healthcare cover.
Employers are increasingly encouraging staff wellbeing and
retirement savings as part of remuneration packages and we
believe greater emphasis will be placed on these as adoption
of flexible working practices becomes more commonplace. This
focus on employee benefits and retention of key staff will provide
opportunities for growth over the coming years.
Acquisitions
We have developed considerable expertise and a strong track
record in the execution and subsequent integration of acquisitions.
At the year end, we had invested over £238m since our admission
to AIM in 2005, bringing 32 businesses or client portfolios into
the Group.
All businesses acquired during the year, and in the prior year, are
integrating well and continue to trade ahead of our expectations at
the date of acquisition. All acquisitions have contributed positively to
the Group’s trading results, increasing earnings and enhancing value
and in doing so supporting the acquisition rationale.
We plan to build on our track record of successful acquisitions by
continuing to assess and progress opportunities that meet our
strict criteria. Consolidation within wealth management, asset
management and SIPP administration is expected to continue for
the foreseeable future, with many more opportunities coming
to market.
Relationships
The Group’s performance and shareholder value are influenced by
other stakeholders, principally our clients, suppliers, employees,
regulators, the Government and our strategic partners. Our
approach to all these parties is founded on the principle of open
and honest dialogue, based on a mutual understanding of needs
and objectives.
Relationships with our clients are managed on an individual
basis through our client relationship managers and consultants.
Employees have performance development reviews and employee
forums also provide a communication route between employees
and management. Mattioli Woods also participates in trade
associations and industry groups, which give us access to client
and supplier groups and decision-makers in the Government
and other regulatory bodies. Mattioli Woods is a member of the
Association of Member-directed Pension Schemes and the
Quoted Companies Alliance.
Resources
The Group aims to safeguard the assets that give it competitive
advantage, including its reputation for quality and proactive advice,
its technical competency and its people.
Our core values provide a framework for integrity, leading
to responsible and ethical business practices. Structures for
accountability from our consultancy and administration teams
through to senior management and the Group’s Board are clearly
defined. The proper operation of the supporting processes and
controls are regularly reviewed by the Audit Committee and the
Risk and Compliance Committee and take into account ethical
considerations, including procedures for ‘whistleblowing’.
Mattioli Woods plc Annual Report 2022 S
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23
Our people
I sincerely thank and remain humbled by the continued
professionalism, commitment, endeavour and agility that our
people have shown in managing our clients’ affairs throughout
another challenging year.
As our business continues to evolve and grow, the Board recognises
the importance of good communication and will seek to ensure
the strong client-centric behaviours embedded within the business
are preserved. The benefit of changes made to our governance
structure in the prior year are now being realised.
David Kiddie has been appointed Independent Non-Executive Chair
and brings many years of both international senior executive and
investment management experiences that will benefit the Group.
Outside of Board meetings, Non-Executive Directors have held a
number of meetings with employees and shareholders to share
experiences more directly.
Total headcount at 31 May 2022 had increased to 847 (2021: 663),
primarily as a result of recent acquisitions and recruitment. We
remain committed to developing our people, including the
professional development and training of our pension consultants,
and maintaining capacity to deliver further growth. We continue to
enjoy a strong team spirit and facilitate employee equity ownership
through the Mattioli Woods plc Share Incentive Plan (“the Plan”) and
other share schemes. At the end of the year, 65% of eligible staff
had invested in the Plan (2021: 63%) and we continue to encourage
broader staff participation.
The Mattioli Woods Employee Benefit Trust (“the Trust”) holds
shares for the benefit of the Group’s employees and, in particular,
to satisfy the vesting of awards made under the Company’s various
share schemes. The market purchase of shares by the Trust can
help to avoid dilution of shareholders by reducing the need for the
Company to issue new shares.
Forward-looking statements
The Strategic Report is prepared for the members of
Mattioli Woods and should not be relied upon by any other
party for any other purpose. Where the report contains forward-
looking statements these are made by the Directors in good faith
based on the information available to them at the time of their
approval of this report. Consequently, such statements should be
treated with caution due to the inherent uncertainties, including
both economic and business risks underlying such forward-looking
statements and information. The Group undertakes no obligation to
update these forward-looking statements.
Mattioli Woods plc Annual Report 2022F 24
S
Chief Executive’s review continued
Principal risks and uncertainties
The Board is ultimately responsible for
risk management and regularly considers
the most significant and emerging
threats to the Group’s strategy, as well
as establishing and maintaining the
Group’s systems of internal control and
risk management and reviewing the
effectiveness of those systems.
The Board and senior management are actively involved in a
regular risk assessment process as part of our risk management
framework, supported by the new requirements of the Investment
Firm Prudential Regime (“IFPR”) internal capital and risk assessment
(“ICARA”) process. The ICARA assesses the principal risks facing the
Group. Stress tests include consideration of the impact of a number
of severe but plausible events that could impact the business. The
ICARA also takes account of the availability and likely effectiveness
of mitigating actions that could be taken to avoid or reduce the
impact or occurrence of the underlying risks.
Day-to-day, our risk assessment process considers both the
impact and likelihood of risk events that could materialise and
affect the delivery of the Group’s strategic goals. Risk owners
regularly review and update where needed the controls in place
to mitigate the impact of the risks, with independent review and
challenge given by the Risk Management team. Throughout the
Group, all employees have a responsibility for managing risk and
adhering to our control framework.
There are a number of potential risks that could hinder the
implementation of the Group’s strategy and have a material
impact on its long-term performance. These arise from internal
or external events, acts or omissions that could pose a threat
to the Group. The principal risks identified as having a potential
material impact on the Group are detailed below, together with
the principal means of mitigation. The risk factors mentioned
do not purport to be exhaustive as there may be additional risks
that materialise over time that the Group has not yet identified
or deemed to have a potentially material adverse effect on
the business:
Industry risks
Increase
No change Decrease
Risk type
Description
Mitigating factors
Chance
Impact
Change
in risk
Changes in
investment
markets and
poor investment
performance
While the impact
of the COVID-19
pandemic, and its
effect on economic
and financial
markets globally,
has dissipated
somewhat, the war
in Ukraine has had a
significant impact on
investment markets.
Resulting volatility
may adversely
affect trading and/
or the value of the
Group’s assets
under management,
administration and
advice, from which
we derive revenues.
• Majority of clients’ funds held within
High
Medium
registered pension schemes or ISAs, where
clients are less likely to withdraw funds and
lose tax benefits, due to the longer-term
nature of financial planning.
• Broad range of investment solutions enables
clients to shelter from market volatility
through diversification, while continuing to
generate revenues for the Group.
• Market volatility is closely monitored by
the Asset Allocation team, as delegated
by the Investment Committee, and includes
monthly assessment of what is changing
in markets and the economic environment
globally and regular risk analysis, including a
sentiment survey of the individual members
of the multi-asset team considering their
own analysis of external analysts’ reports
on a rolling basis. There are also regular
reviews of liquidity. Further, performance is
considered every month, in detail, including
attribution and contribution analysis. Reports
are then discussed at the Investment
Committee every two months.
Mattioli Woods plc Annual Report 2022 S
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25
Industry risks continued
Risk type
Description
Mitigating factors
Chance
Impact
Change
in risk
Increase
No change Decrease
Internal action plan in place to deliver short,
medium, and longer-term initiatives.
High
High
The Mattioli Woods Responsible Equity Fund,
geared to the principles of ESG, launched during
the year, attracting £7.2m of client investment
at the year end.
ESG holds a central consideration within the
product governance framework of the Group.
Planned recruitment into a dedicated ESG
role underway.
Continuing to explore positive actions,
harnessing technology and solutions across the
business to reduce our environmental footprint
and make a positive contribution towards our
ESG-related goals.
High
Medium
• The Group occupies resilient buildings that
can withstand damage from storms, strong
winds and flooding.
• Disaster Recovery (“DR”) and Business
Continuity Planning (“BCP”) are in place to
continue business as usual.
• Leveraging experience gained during the
COVID-19 outbreak, we support flexible
working and work from home options, which
have been tested as part of our continuity
plans and contribute positively to our goal
of being a paperless business where possible.
Compliance with
environmental,
social and
governance
(“ESG”)
standards
Climate change
– physical
impacts
Failure to meet
future ESG reporting
requirements, the
Group not being
recognised as an
ESG-responsible
business or ESG
products offered
not meeting
target market
requirements could
result in:
• Regulatory
censure;
• Loss of client
or shareholder
confidence; and
• Clients looking
elsewhere for
ESG-focused
products.
Impacts from the
increasing severity
and frequency of
extreme climate
events, and longer-
term progressive
shifts in the climate
might include:
• Business
interruption as a
result of damage
to infrastructure
or loss of
services;
• Costs of
improving
resilience and
adaptation; and
• Lower
productivity,
income and
profits.
Mattioli Woods plc Annual Report 2022F 26
S
Chief Executive’s review continued
Principal risks and uncertainties continued
Industry risks continued
Risk type
Description
Mitigating factors
Chance
Impact
Change
in risk
• DR/BCP in place to continue business
High
Medium
as usual.
• Plans in place to reduce negative impact
of our activities through initiatives such
as moving towards paperless offices and
transitioning towards an all-electric car fleet.
• Launch of The Mattioli Woods Responsible
Equity Fund.
Climate change
– transition
impacts
Transition impacts
relate to the process
of adjusting to
a low-carbon
economy. Transition
risks can occur
when moving
towards a less
polluting, greener
economy.
Transitions such
as the UK ban on
the sale of fossil-
fuel-powered cars
from 2040 could
mean big shifts in
asset values, higher
costs of doing
business, business
disruptions or lower
productivity, income
and profits.
Changing
markets and
increased
competition
The Group
operates in a
highly competitive
environment
with evolving
characteristics
and trends.
• The Group seeks to maintain strong working
relationships with clients underpinned by
high levels of service, quality products and
a continued focus on product development
and innovation.
• Consolidating market position is enhancing
the Group’s competitive advantage.
• Control over scalable and flexible bespoke
High
High
pension administration platform.
• Experienced management team with
a strong track record.
• Loyal customer base and strong client
retention.
• Broad service offering gives diversified
revenue streams.
• Our investment in people, cloud-based
technology and infrastructure provides
an operating model that includes home
working for the majority of staff and
specific shift rotations for our people
carrying out essential tasks.
• Harnessing efficiencies through our
continued assessment of the changes
to working patterns and methods.
Mattioli Woods plc Annual Report 2022 Industry risks continued
S
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27
Increase
No change Decrease
Risk type
Description
Mitigating factors
Chance
Impact
Change
in risk
Regulatory risk
The Group may be
adversely affected
as a result of new or
revised legislation
or regulations or
by changes in the
interpretation or
enforcement of
existing laws and
regulations.
• Strong compliance culture, with appropriate
Medium
oversight and reporting supported by
training.
• External professional advisers are engaged to
review and advise upon control environment.
• Business model and culture embraces FCA
principles, including treating customers fairly.
• Decision to withdraw from providing advice
on safeguarded pensions.
• Financial strength provides comfort should
there be a need to increase capital resource
requirements.
Medium /
High
Operational risks
Risk type
Description
Mitigating factors
Chance
Impact
Change
in risk
• Strong compliance culture with a focus
Medium
High
on positive customer outcomes.
• High level of internal controls, including
checks on new staff.
• Well-trained staff who ensure the interests
of clients are met in the services provided.
• Ongoing reviews and testing of data
High
High
security, including penetration testing
and ‘phishing’ exercises.
• IT performance, scalability and security
are deemed top priorities by the Board,
with additional controls introduced
during the year.
• Experienced in-house team of IT
professionals and established name suppliers.
• Ongoing audits of secure remote working,
information security and operational
resilience undertaken in light of more
flexible working practices.
Damage to
the Group’s
reputation
Errors,
breakdown
or security
breaches in
respect of
the Group’s
software or
information
technology
systems
There is a risk
of reputational
damage as a result
of employee
misconduct, failure
to manage inside
information or
conflicts of interest,
fraud, improper
practice, poor client
service or advice.
Serious or
prolonged
breaches, errors or
breakdowns in the
Group’s software
or information
technology systems
could negatively
impact customer
confidence. It
could also breach
contracts with
customers and data
protection laws,
rendering us liable
to disciplinary action
by governmental
and regulatory
authorities, as well
as to claims by our
clients.
Mattioli Woods plc Annual Report 2022F 28
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Chief Executive’s review continued
Principal risks and uncertainties continued
Operational risks continued
Risk type
Description
Mitigating factors
Chance
Impact
Change
in risk
Business
continuity and
operational
resilience
In addition to the
failure of IT systems,
there is a risk of
disruption to the
business as a result
of power failure,
fire, flood, acts of
terrorism, relocation
problems and failure
of external suppliers.
Fraud risk
There is a risk an
employee or third-
party defrauds
either the Group
or a client.
Medium
Medium
High
Medium
• Implementation of ICARA, backed up by
a robust assessment of known risks and
risks that emerge by the Operational Risk
and Compliance Committee, which draws
membership from across the business,
embeds a culture of risk awareness to
ensure early detection and implementation
of mitigating steps.
• Periodic review and approval of BCP,
considering best practice methodologies.
• Periodic review and approval of DRP and
disaster recovery teams (including IT support)
on call to deal with major incidents at short
notice. Business impact analysis has been
conducted by department.
• Loss of revenue is covered by business
interruption insurance (subject to certain
limits and exclusions).
• All Group operations can move to ‘working
from home’ at short notice, with little or
no interruption to day-to-day business
operations.
• Ongoing assessment of external suppliers’
performance.
• The Group ensures the control environment
mitigates against the misappropriation of
client assets, with additional controls being
introduced to safeguard client assets.
• The Group does not hold client money.
• Strong corporate controls require dual
signatures or online approvals for all
payments. Executive Committee approval for
all expenditure greater than £100,000 and
Board approval for all expenditure greater
than £250,000.
• Assessment of fraud risk every six months
discussed with the Audit Committee, Risk
and Compliance Committee and external
auditors.
• Clients have view-only access to information.
• Ongoing review of risk of fraud due to
external attack on the Group’s IT systems,
including audit of secure remote working,
information security and operational
resilience undertaken on an ongoing basis.
• All staff are required to complete structured
training on information security, cyber crime,
fighting fraud and anti-money laundering
each year.
Mattioli Woods plc Annual Report 2022 Operational risks continued
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Risk type
Description
Mitigating factors
Chance
Impact
Change
in risk
Increase
No change Decrease
Key personnel
risk
The loss of, or
inability to recruit,
key personnel could
have a material
adverse effect
on the Group’s
business, results
of operations or
financial condition.
Litigation or
claims made
against the
Group
Reliance on
third parties or
outsourcing risk
Risk of liability
related to litigation
from clients or
third parties and
assurance that a
claim or claims will
not be covered
by insurance or,
if covered, will
exceed the limits of
available insurance
coverage, or that
any insurer will
become insolvent
and will not meet
its obligations to
provide the Group
with cover.
Any regulatory
breach or service
failure on the part
of an outsourced
service provider
could expose the
Group to the risk of
regulatory sanctions
and reputational
damage.
• Succession planning is a key consideration
Low
Medium
throughout the Group.
• Success of the Group should attract high
calibre candidates.
• Share-based schemes in operation to
incentivise staff and encourage retention.
• Recruitment programmes in place to attract
appropriate new staff.
• Cross functional acquisition team brought
into acquisition projects at an early stage.
• Ensuring the health and wellbeing of our
people remains a priority. The way our
people work has changed, with the adoption
of training, talent and resource management
and leadership in a remote environment.
• Appropriate levels of Professional Indemnity
insurance cover regularly reviewed with the
Group’s advisers.
• Comprehensive internal review procedures,
including compliance sign-off, for advice and
marketing materials.
• Maintenance of three charging models;
time cost, fixed and asset based, which are
aligned to specific service propositions and
agreed with clients.
• Restricted status for our consultants to
enable the recommendation of our own
products and others in the market.
High
Medium
• Due diligence is part of the selection process
High
High
for key suppliers, including assurance on
their controls over shared data.
• Key contracts with third parties handling
sensitive data are escalated for review
and approval.
• Service level agreements in place with
key suppliers.
• Ongoing review of relationships and
concentration of risk with key
business partners.
• Review of outsourcing is a key area of
focus in Internal Audit plan.
• Our operational risk assessment considers
the impact of disruptions on critical business
functions, with the BCP updated to include
a range of scenarios, informed in part by
our experience through the pandemic.
Mattioli Woods plc Annual Report 2022F 30
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Chief Executive’s review continued
Principal risks and uncertainties continued
Operational risks continued
Risk type
Description
Mitigating factors
Chance
Impact
Change
in risk
SIPP
administration
for non-advised
clients (“third-
party SIPP
administration”)
Strategic risk
Conduct risk
Conduct risk
(acquisitions)
Risk that through
the provision of
SIPP administration
services to clients
with no adviser or a
third-party adviser,
we facilitate the
client acting with no
or bad advice.
Risk that
management will
pursue inappropriate
strategies or
implement the
Group’s strategy
ineffectively.
The risk that we fail
our clients through
the flawed design
or mis-selling
of our products
or services, or
poor business
conduct results in
client outcomes
that do not meet
their needs and
circumstances.
The risk that
acquired clients
have been failed
by the acquired
business through
the flawed design
or mis-selling
of products
or services, or
poor business
conduct resulting
in outcomes
that do not meet
their needs and
circumstances.
• The Group recognises the duty of care
High
Low
owed to these clients.
• Evidence of the suitability of advice
where pension investments are out of the
ordinary (e.g. ensuring that the client is a
sophisticated investor).
• Credentials of third-party advisers are
checked against the FCA register.
• Experienced management team with
Low
Low
successful track record to date.
• Management has demonstrated a thorough
understanding of the market and monitors
this through regular meetings with clients.
• Ongoing debate and counsel provided by
a strong team of Non-Executive Board
members.
• Only appropriately authorised consultants
Medium
Medium
can provide advice.
• Robust training and competence scheme in place.
• Operation of ‘three lines of defence’ model,
including internal and external reviews to monitor
suitability of advice being given to clients.
• Compliance oversight by a dedicated team
covering: conduct, product, complaints and
technical.
• Non-standard investments require review
and approval by the Group’s Non-Standard
Investment team.
• Professional Indemnity (“PI”) insurance in place.
• Due diligence process used to identify and
assess risk in acquired client portfolios.
• Run-off PI insurance cover and specific
indemnities provided by the sellers of
acquired businesses to mitigate the Group’s
risk exposure.
• Active dialogue with the FCA, especially
where we identify specific risks associated
with the target business.
• Inclusion of warranties and indemnity clauses
in purchase agreements.
High
Low
Mattioli Woods plc Annual Report 2022 Operational risks continued
S
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Risk type
Description
Mitigating factors
Chance
Impact
Change
in risk
Increase
No change Decrease
Information
security (or
cyber) risk
The risk that the
security controls
over our IT systems
are compromised by
internal or external
influences, resulting
in unauthorised
access to our
client or corporate
confidential data.
• External security provider scans for intrusion
High
High
threats across our network 24/7.
• Electronic data is protected by user access
controls. Data privacy training provided to
all staff.
• Robust firewalls and patches maintained to
prevent unauthorised access to IT systems,
including utilisation of third-party providers
to protect corporate networks.
• Electronic data is protected by user access
controls. Data privacy training is provided
across the Group.
• Compliance with the Data Protection
Act and registration with the Information
Commissioner’s Office.
• Two step verification of any client instruction
received by email or post.
• Audit of secure remote working, information
security and operational resilience ongoing.
Financial risks
Risk type
Description
Mitigating factors
Chance
Impact
Change
in risk
Counterparty
default
The risk that a
counterparty to a
financial obligation
will default on
repayments.
Bank default
The risk that a bank
could fail.
Concentration
risk
A component of
credit risk, arising
from a lack of
diversity in business
activities or
geographical risk.
• The Group trades only with recognised,
Medium
Medium
creditworthy third parties.
• Customers who wish to trade on credit terms
are subject to credit verification procedures.
• All receivables are reviewed on an ongoing
basis for risk of non-collection and any
doubtful balances are provided against.
• We only use banks with strong credit ratings.
• Client deposits spread across multiple banks.
• Regular review and challenge of treasury
policy by management.
• The client base is broad, without significant
exposure to any individual client or group
of clients.
• Broad service offering gives diversified
revenue streams.
Medium
High
Medium
Medium
Mattioli Woods plc Annual Report 2022F 32
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Chief Executive’s review continued
Principal risks and uncertainties continued
Financial risks continued
Risk type
Description
Mitigating factors
Chance
Impact
Change
in risk
Increase
No change Decrease
Information
security (or
cyber) risk
The risk that the
security controls
over our IT systems
are compromised by
internal or external
influences, resulting
in unauthorised
access to our
client or corporate
confidential data.
Cost inflation
Interest rate risk
The risk that
increases in the
price of goods and
services erode the
Group’s profits.
The risk that the
Group will sustain
losses from adverse
movements in
interest bearing
assets.
In addition, Central
Bank interest rate
increases are
increasingly being
used in an attempt
to counter inflation,
which in turn may
encourage clients to
leave available funds
in cash.
• External security provider scans for intrusion
High
High
threats across our network 24/7.
• Electronic data is protected by user access
controls. Data privacy training provided to all staff.
• Robust firewalls and patches maintained to
prevent unauthorised access to IT systems,
including utilisation of third-party providers to
protect corporate networks.
• Electronic data is protected by user access
controls. Data privacy training is provided
across the Group.
• Compliance with the Data Protection Act
and registration with the Information
Commissioner’s Office.
• Two step verification of any client instruction
received by email or post.
• Audit of secure remote working, information
security and operational resilience ongoing.
• The Group manages a significant amount of
High
Medium
New risk
Medium
Medium
New risk
discretionary spend in areas such as marketing
and IT development, which can be re-phased or
postponed to mitigate the impact of rising prices.
• The Group has sought to realise operational
efficiencies and controlled wage inflation
through the use of one-off awards to mitigate
the impact of wage inflation.
• The Group maintains a strong balance sheet
and currently has no interest bearing debt.
• Exposure to movements in interest bearing
assets is monitored to ensure that the Group is
optimising its interest earning potential within
accepted liquidity and credit constraints.
• Good relationships with key banking partners.
• Access to competitive interest rates due to scale
of our business.
• The Group has proven its ability to withstand
challenging market conditions, with any
reduction in traditional investment-related
revenues typically offset by additional
consultancy fees generated as a result of clients
proactively seeking advice, or fees on new
investment products created in response to client
demand for higher-yielding investments.
• Increasing interest rates provide an opportunity
to improve client rates on pension scheme bank
accounts, whilst generating an increased banking
income for the Group.
Emerging risks, including legislative, regulatory change and biothreats emerging from the COVID-19 pandemic, have the potential to
impact the Group and its strategy. The Board, Audit Committee and Risk and Compliance Committee continue to monitor emerging
risks and threats to the financial services sector including, for example, the increased number of attempted cyber and attempted
phishing attacks, regulatory change, climate change and scenarios potentially arising from political and economic developments,
including implications from ongoing world conflicts, and change in political leadership. We intend to continue to focus on operational
resilience and enhancing the control environment over the next 12 months.
Mattioli Woods plc Annual Report 2022 Section 172 statement
The Directors consider that in conducting
the business of the Company over the
course of the year they have complied
with Section 172(1) of the Companies Act
2006 (“the Act”) by fulfilling their duty to
promote the success of the Company
and act in the way they consider, in good
faith, would be most likely to promote the
success of the Company for the benefit
of its members as a whole.
S
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Engaging with stakeholders
The continued success of our business is dependent on the
support of all of our stakeholders. Building positive relationships
with stakeholders that share our values is important to us and
working together towards shared goals assists us in delivering
long-term sustainable success.
To fulfil their duties, the senior management team, the Directors of
each subsidiary company and the Directors of the Group itself take
care to have regard to the likely consequences on all stakeholders
of the decisions and actions they take, with a long-term view in
mind and with the highest standards of conduct, in line with Group
policies. Where possible, decisions are carefully discussed with
affected groups and are therefore fully understood and supported
when taken.
Reports are regularly made to the Board by the senior management
team about the strategy, performance and key decisions taken,
which provides assurance that proper consideration is given to
stakeholder interests in decision-making, and the Board uses this
information to assess the impact of decisions on each stakeholder
group as part of its own decision-making process.
The Group’s governance structure allows the Board and the senior
management team to have due regard to the impact of decisions
on the following matters specified in Section 172 (1) of the Act:
Section 172 factor
Approach taken
Consequences of
any decision in the
long term
The business model and strategy of the Company is set out within the Strategic Report. Any deviation
from or amendment to that strategy is subject to Board and, if necessary, shareholder approval.
At least annually, the Board considers a budget for the delivery of its strategic objectives based on
a three-year forecast model. The senior management team reports non-financial and financial key
performance indicators to the Board each month, including but not limited to the measures set out in
the ‘Key performance indicators’ section of the Strategic Report on page 16, which are used to assess
the outcome of decisions made.
The Board’s commitment to keeping in mind the long-term consequences of its decisions underlies its
focus on risk, including risks to the long-term success of the business, leading to the conclusion that
during the current period of heightened political and market uncertainty, both in the UK and globally,
a conservative level of cash resources should be maintained such that the payment of dividends to
shareholders and variable remuneration to employees are balanced.
The strategy of the Group is focused on positive client outcomes that can deliver sustainable
shareholder returns over the long term and as such the long term is firmly within the sights of the
Board when all material decisions are made.
Interests
of employees
The Group is committed to developing our people and maintaining the capacity to deliver sustainable
growth. How the Directors have regard to the interests of the individuals responsible for delivery of its
products and services is set out in the ‘Our people’ sections of the Strategic Report on pages 9 and 23
and ‘Employees’ section of the Directors’ report on page 68.
Fostering business
relationships with
suppliers, customers
and others
Employees are represented on the Board by Martin Reason.
How the business manages relationships with suppliers, clients and other counterparties is set out
in the ‘Relationships’ section of the Strategic Report. Suppliers and other counterparties are typically
professional firms such as banks, investment houses, platform providers, accounting firms and legal
firms with which the senior management team often has a longstanding relationship.
Where material counterparties are new to the business, checks, including anti-money laundering
checks, are conducted prior to transacting any business to ensure that no reputational or legal
issues would arise from engaging with that counterparty. The Company also periodically reviews
the compliance of all material counterparties with relevant laws and regulations such as the Modern
Slavery Act 2015. The Company pays suppliers in accordance with pre-agreed terms.
Due to the Group’s focus on holistic planning and providing high levels of personal service while
maintaining close client relationships, it has open lines of communication with clients and can
understand and resolve any issues promptly.
Mattioli Woods plc Annual Report 2022F 34
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Chief Executive’s review continued
Section 172 statement continued
Section 172 factor
Approach taken
Impact of operations on
the community and the
environment
The interaction of the Company with the wider community is explained in the ‘Relationships’ and
‘Corporate social responsibility’ sections of the Strategic Report on page 22 and pages 40 to 41.
The Group’s impact on the environment is limited due to the nature of the Group’s business operations
as set out in the ‘Environmental performance and strategy’ section of the Strategic Report and
‘Environmental’ section of the Directors’ report. However, the Board is committed to limiting the impact
of the business on the environment where possible.
The Board takes overall responsibility for the Company’s impact on the local communities in which we
operate and the environment. The Company’s approach to sustainability, preventing bribery, money
laundering, slavery and human trafficking is disclosed in the ‘Corporate social responsibility’ section
of the Strategic Report.
Maintaining high
standards of business
conduct
The Board believes that the ability of the Company to conduct its business and finance activities
depends in part on the reputation of the Board and senior management team. The risk of falling short
of the high standards expected and thereby risking its business reputation is included in the Board’s
review of the Company’s risk register, which is conducted periodically.
Acting fairly between
members
The Board is responsible to shareholders for the proper management of the Group and how the Board
discharges its duties is set out in the Corporate governance report on pages 52 to 59.
The principal risks and uncertainties facing the business are set out in that section of the Strategic Report
on pages 24 to 32.
The Company’s shareholders are a very important stakeholder group. The Board oversees a formal
investor relations programme which involves the Directors and senior management team engaging
routinely with the Company’s shareholders. The programme is managed by the Company’s brokers
and the Board receives prompt feedback from both its brokers and its financial public relations adviser
on the outcomes of meetings.
The Board aims to be open with shareholders and available to them, subject to compliance with
relevant securities laws. The Independent Non-Executive Chair of the Company and other Non-
Executive Directors make themselves available for meetings as appropriate and all attend the
Company’s Annual General Meeting (“AGM”).
The investor relations programme is designed to promote formal engagement with investors and is
typically conducted after each half-yearly results announcement. The Group also has open lines of
communication with existing investors who may request meetings and with potential new investors
on an ad hoc basis throughout the year, including where prompted by Company announcements. For
the last two years the Directors have also engaged with retail shareholders through the Investor Meet
Company platform, a communication channel endorsed by the QCA. We plan to increase the level of
retail investor engagement in the current year with publication of specific retail-focused research on
the Group to coincide with the release of the Annual Report and Accounts for the year ended 31 May
2022. Shareholder presentations are made available on the Company’s website. The Company has a
single class of shares in issue with all members of the Company having equal rights.
Mattioli Woods plc Annual Report 2022 S
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Methods used by the Board
The main methods used by the Directors to perform their
duties include:
• Board strategy days to review all aspects of the Group’s business
model and strategy and assess the long-term sustainable
success of the Group and its impact on key stakeholders. An
executive team strategy day was held during the year, with a
Board strategy day and a number of other strategy days and
sessions planned to take place in the current year;
• The Board meets regularly throughout the year as well as on an
ad hoc basis, as required by time critical business needs, such
as acquisitions. Board members regularly meet with members of
the senior management team;
• The Board is responsible for the Company’s ESG activities set
out in the Strategic Report on pages 38 to 45. Iain McKenzie is
appointed as the designated executive with responsibility for ESG;
• The Board’s risk management procedures set out in
the Corporate governance report identify the potential
consequences of decisions in the short, medium and long term
so that mitigation plans can be put in place to prevent, reduce
or eliminate risks to the Company and wider stakeholders;
• The Board sets the Company’s purpose, values and strategy,
detailed in the ‘Our approach’ and ‘Strategy’ sections of the
Strategic Report, and the senior management team ensures they
align with its culture;
• The Board carries out direct shareholder engagement via the AGM
and Directors attend shareholder meetings on an ad hoc basis;
• External assurance is received through internal and external
audits and reports from brokers and advisers; and
• Specific training for existing Directors and induction for new
Directors is as set out in the Corporate governance report.
Principal decisions in the year
Mattioli Woods comprises a number of operating segments,
through which the Executive team engages with each segment’s
unique stakeholders as well as other businesses in the Group. The
governance framework in place during the year delegated day-
to-day operational authority to the Management Engagement
Committee, subject to a list of matters reserved for decision by the
Governance Committee or the full Board only, up to defined levels
of cost and impact.
The Board has a formal schedule of matters specifically reserved to it
for decision, including strategic planning, business acquisitions and
disposals, authorisation of major capital expenditure and material
contractual arrangements, setting policies for the conduct of
business and approval of budgets and financial statements.
The principal non-routine decisions taken by the Board during the
year were:
• Final approval of the equity fundraise for £112m to fund
the acquisitions of Maven, Ludlow and a pipeline of bolt-on
acquisitions including the subsequent acquisitions of Richings
Financial Management and Ferguson Financial Management.
The Board considered the strategic rationale for each
acquisition, the associated risks and the performance impact
on the Group. Acquisitions during the year are further detailed
in Note 3 to the financial statements;
• The review and decision not to progress with a number of
other potential acquisitions during the year;
• The appointment of Moore Kingston Smith LLP (“MKS”) as
Group auditor for the financial year ended 31 May 2022. The
Board had oversight of a detailed tender process undertaken
by the Company’s Audit Committee. The Board based its
decision upon the development of the Group’s core business
and positive impact of recent acquisitions, which have
changed the Group’s audit needs, with the primary focus on
finding an audit firm that shares the Group’s commercial and
client-focused culture while retaining their independence in
accordance with relevant ethical requirements;
• Approval to wind-down the Mattioli Woods Structured Products
Fund based upon a review of client outcomes through
performance of the fund compared to the benchmark index and
cost of investment. The Board focused on ensuring all clients
were treated with respect and equally during the wind-down,
with alternative investment options offered to clients;
• Each year the Board conducts a review of its effectiveness
and as part of this review approved changes to the Group’s
governance and management structure, including changes
to committee structures and memberships. The Board
believes that the revised structure will provide the appropriate
knowledge, oversight and commercial challenge to support
further growth, integration of acquired businesses and
improvements in operational efficiency;
• The appointment of David Kiddie as Independent Non-
Executive Chair. The Board considered the balance of skills
and leadership required for this role based on the respective
roles and experience of each Board member and the ongoing
requirements of the business; and
• Determination of dividend. The Board recommends a final
dividend of 17.8p per share (2021: 13.5p). This decision
was taken in conjunction with a review of returns to all key
stakeholders, including staff in the form of salary awards and
bonus payments.
Due to the nature of these decisions, a variety of stakeholders had
to be considered as part of the Board’s discussions. Each decision
was announced at the time, so that all stakeholders were aware of
the decisions.
Mattioli Woods plc Annual Report 2022F 36
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Chief Executive’s review continued
Stakeholders
The Directors are aware there are a number of other stakeholders, in addition to
shareholders, who will be affected by the actions of the Group. The below table
outlines how we consider these stakeholders and how we engage with them:
Stakeholder Why we engage
How we engage
How we responded
Our clients
Clients are the central
focus of our business.
By engaging with them,
we are able to gain a
better understanding of
their needs and ensure
we can provide them
with bespoke solutions
to address their financial
goals.
Employees
Shareholders
Our people are the key to
our success, and we want
them to be successful
individually and as a team.
The Board recognises
that the firm’s culture and
corporate values underpin
the effective delivery of
its strategy. Our aim is to
continue to attract, retain,
develop and motivate
the right people for
our current and future
business needs.
As owners of the
Group we rely on our
shareholders’ support.
Their opinions are
important to us and we
want to give them a better
understanding of our
business. In addition, we
have obligations as an
AIM-listed company to
provide information to
our shareholders.
We engage with our clients in a variety of ways,
driven by their requirements and preferences,
including:
• regular meetings with consultants and
investment managers;
• the use of video technology to enable
virtual engagement with clients;
• virtual seminars held for clients and
introducers;
• investment updates and quarterly
statements;
• regular market bulletins both in printed
and electronic form; and
• client portals, where investment
management clients can view details
of their investments.
We have a comprehensive internal
communication programme to engage
with and listen to our people, including:
• the CEO and other members of the senior
management team frequently leading
staff forums ranging from all staff video
conferences to small group discussions;
• Martin Reason was appointed as the
designated Non-Executive Director with
responsibility for engagement with the
workforce; and
• we undertake regular employee
engagement surveys working closely
with an external provider to provide an
interactive feedback experience, the results
of which are closely monitored with the
Board and senior management team
considering what actions need to be
taken in response.
We engage with our shareholders through
the following activities:
• regular meetings with our investors
throughout the year to discuss delivery of
our strategy, current performance and plans
for the business through our Executive and
Non-Executive Directors; and
• the provision of detailed financial reports
and presentations on the business at the
half year and full year.
Our clients’ desire to have easier
on-boarding and better access to
information about their financial
affairs resulted in the Board
supporting the Group’s investment
in Tiller Technology and their
appointment to develop a new
digital, self-investment platform.
ESG has become an important topic
for our clients and the launch of The
Mattioli Woods Responsible Equity
Fund reflects this.
Post-pandemic there has been
an increased focus on health
and wellbeing, in addition to
development opportunities, pay,
benefits and flexible working
arrangements.
This focus on our staff enabled the
successful transition and continued
adoption of flexible working
practices.
We continue to strengthen our
wellbeing capabilities, increasing
the number of staff focused on this
including creation of an internal
team of mental health first aiders.
We have provided regular updates
on Company performance
throughout the year, with dividends
increased and paid during the year.
We have a number of long-term,
committed shareholders. The highly
successful share placing to fund the
acquisition of Maven, Ludlow and a
pipeline of smaller bolt-ons reflects
the strong relationships we have
built with our shareholders.
Mattioli Woods plc Annual Report 2022 S
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Stakeholder Why we engage
How we engage
How we responded
Suppliers
We recognise the
importance of our various
suppliers in delivering
services to clients and
ensure we have shared
values.
Communities We seek both to support
our community and to
reduce our impact on the
environment as much as
possible.
We recognise the
responsibility we have to
wider society and other
key stakeholders. We
believe that demanding
high levels of corporate
responsibility is the right
thing to do.
We seek to build positive
relationships with the
Government and our
regulator who provide
key oversight of how
we run our business
and we believe our
clients’ best interests are
served by our working
constructively with them.
The
Government
and regulator
We engage with our suppliers to develop
mutually beneficial and lasting partnerships.
Engagement with suppliers is primarily through
a series of interactions and formal reviews.
Key areas of focus have included
innovation, enhancing our client
propositions, health and safety and
sustainability.
The Board recognises that relationships
with suppliers are important to the Group’s
long-term success and is briefed on supplier
feedback and issues on a regular basis.
We engage with the communities in which we
operate to build trust and understand the local
issues that are important to them.
We seek our people’s input on how we can
support local causes and issues, create
opportunities to recruit and develop local
people and help to look after the environment.
We partner with local charities and
organisations at an individual office level to
raise awareness and funds. The impact of
decisions on the environment both locally
and nationally is considered with such
considerations as the use of and disposal of
paper and plastic.
We engage with the Government and
our regulator through a range of industry
consultations, forums, meetings and
conferences to communicate our views to
policy makers relevant to our business.
Mattioli Woods is a member of the Association
of Member-directed Pension Schemes and the
Quoted Companies Alliance.
Key areas of focus are compliance with laws
and regulations, health and safety. The Board is
updated on legal and regulatory developments
and takes these into account when considering
future actions.
We continued to support a number
of national and local charities during
the year including our previous
national charity Alzheimer’s Research
UK. In addition we supported over 30
local charities as selected by our staff
teams across the UK, donating £0.1m
during the year.
We continue to support local
charities in the communities in
which we operate, as well as through
continuation of our consultancy
training programme with intake
across the country and a marked
increased recruitment of apprentices
into the Group.
We held regular meetings with
our regulators during the year and
continue to have a proactive and
transparent relationship with them.
We ensured our payment terms
with all suppliers were fair and in
compliance with payment practices.
We regularly assess our key suppliers
for conformance to the Modern
Slavery Act and conducted a risk
assessment of our supply chain.
Our modern slavery statement is
reviewed and updated by the Board
annually.
Further information on the ways in which the Board engages with
stakeholders is set out in the Corporate governance report on pages
52 to 59 and the Strategic Report on pages 8, 9, 36 and 37.
Mattioli Woods is a progressive business,
where individuals are free to generate
ideas and improve processes. Having
the freedom to do this is liberating
and enjoyable.
Jonathon Marchant
Fund Manager
Mattioli Woods plc Annual Report 2022F 38
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Chief Executive’s review / Acting and delivering responsibly
Environmental performance and strategy
Due to the Group’s activities,
Mattioli Woods impacts the local and
global environment, and it is committed
to monitoring the environmental
performance of its assets and using this
information to develop robust strategies
to minimise its environmental impact
where possible.
The Companies (Directors’ Report) and Limited Liability
Partnerships (Energy and Carbon Report) Regulations 2018
implement the Government’s policy on Streamlined Energy and
Carbon Reporting, requiring disclosure of the environmental
performance of the Group’s assets through calculating the
Group’s greenhouse gas (“GHG”) emissions and subsequently,
setting strategies to minimise these emissions. The following
information summarises the Group’s environmental
performance over the year.
Methodology
GHG emissions are quantified and reported according to the
Greenhouse Gas Protocol. Consumption data has been collated
and converted into CO2 equivalent (“CO2e”) using the UK
Government 2021 Conversion Factors for Company Reporting to
calculate emissions from corresponding activity data. To collect
consumption data, the Group has reviewed utility invoicing and its
staff expense software to track business mileage in Group-owned
vehicles and own vehicles.
This information has been prepared in accordance with the GHG
Protocol’s Scope 2 Guidance on both location-based and market-
based Scope 2 emissions figures. Data collected relates to the
most recent 12-month period where data was available.
We have calculated energy intensity and emissions intensity using
total floor area which is considered to best represent the scale of the
business compared to using alternative measures such as headcount,
as the majority of energy usage is from buildings, with the impact of
the COVID-19 pandemic reducing the level of fuel consumption by
Group vehicles in the short term.
As part of the data collection, a materiality assessment was applied
to determine which indicators were relevant to the Group. We
have assessed each indicator in terms of its impact on the Group
and its perceived importance to stakeholders.
Sustainability is a key priority for Mattioli Woods and we are
working towards putting in place an environmental vision and
strategy, including the development and implementation of key
performance indicators and long-term targets for Scope 1 and 2
emissions. No electricity or gas consumption is currently directly
from renewables. This strategy will also involve setting a plan of
building and car fleet optimisation opportunities.
Mattioli Woods plc Annual Report 2022 S
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Reporting boundaries and
limitations
The GHG sources that constitute our
operational boundary for the reporting
period are:
• Scope 1: Natural gas combustion within
boilers, gas oil combustion within
generators and road fuel combustion
within owned vehicles.
• Scope 2: Purchased electricity
consumption for our own use.
• Scope 3: Water consumption and fuel
consumption from employee-owned
cars for business use.
Fuel connected with employee train travel
for business use has been excluded as
amounts are likely to be immaterial and we
consider it impractical to make estimations
as only the cost of travel is recorded in
the Group’s expense records. Fugitive
gases from office air conditioning are
also considered immaterial.
Assumptions and
estimations
In some instances data is missing,
including:
• Electricity costs for Mattioli Woods’
Leatherhead and Edinburgh offices
and Maven’s Birmingham, Bristol,
London, Nottingham, Newcastle,
Edinburgh and Durham offices
(which in aggregate represent circa
6.4% of the Group’s total floor area),
which are included in rent and
service charges; and
• Gas and water costs for Mattioli Woods’
Leatherhead, Manchester and Enderby
offices, Ludlow’s Liverpool, Southport
and Preston offices and Maven’s
Glasgow, Birmingham, Bristol,
London, Manchester, Nottingham,
Newcastle, Edinburgh and Durham
offices (which in aggregate represent
circa 21.2% of the Group’s total floor
area), which are included in rent and
service charge payable.
In such cases, estimations have been
applied to fill the gaps, calculated through
data from other similar offices as a proxy.
Performance
The table below shows absolute performance of our Scope 1, 2 and 3 emissions for
the year, which represents the Group’s third year of reporting under the Companies
(Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report)
Regulations 2018:
GHG emissions (tCO2e)
Scope 1
Fuel consumption (gas office heating) (kWh)
Associated GHG (tCO2e)
Fuel consumption (company vehicles) (miles)
Scope 2
Scope 3
Fuel consumption (company vehicles) (MWh)
Associated GHG (tCO2e)
Electricity consumption (office and company
car electricity) (kWh)
Associated GHG (tCO2e)
Total Scope 1 & 2 emissions
Fuel consumption (own cars for business
use) (miles)
Fuel consumption (own cars for business
use) (MWh)
Associated GHG (tCO2e)
Water consumption (m3)
Associated GHG (tCO2e)
Total Scope 3 emissions
Gross Scope 1, 2 and 3 emissions
Total floor area (sqft)
Scope 1 & 2 emissions intensity (tCO2e/sqft/yr)
Scope 3 emissions intensity (tCO2e/sqft/yr)
2022
493,032
2021 Change
49%
330,863
90
61
48%
197,643
37,109 433%
260
45
43 505%
10 350%
796,319
704,925
13%
169
304
164
235
3%
30%
78,765
11,471
587%
104
21
13 697%
3
597%
4,863
2,764
76%
1
22
326
3
6
(76%)
261%
241
35%
16%
11%
105,675
90,742
0.0029
0.0026
0.0002
0.0001
210%
Mattioli Woods plc Annual Report 2022F 40
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Chief Executive’s review / Acting and delivering responsibly continued
Corporate social responsibility
Our commitment to
operating responsibly
As we emerge from the
pandemic, we continue to work
through the challenges placed
in part by the ongoing level of
market uncertainty. Our dedicated
team has allowed us to rise to
these challenges and continue
making a positive contribution to
our stakeholders – our clients,
shareholders, staff, suppliers and
chosen charity partners alike. We
believe this is responsible business
in action. In 2022, our Risk and
Compliance Committee reviewed
where the Group currently stands
and has developed a strategy
defining how we will prioritise and
accelerate environmental, social
and governance workstreams in
the business.
Our approach to achieving good
governance comes from a passion to
ensure we do the right things for our
clients and this is embedded in the
culture of the Mattioli Woods team,
where staff are encouraged to thrive
and develop in their roles and the
business in turn supports them in their
own career development. Our record of
growing our own and promoting from
within adds to the sense of teamship
which underpins everything we do,
a prime example being the Board
appointment of Michael Wright at the
beginning of the year, who joined the
business as a graduate in 2004.
Highlights
£7.2m
Responsible Equities Fund launched this
year attracting investment of £7.2m at the
year end 31 May 2022.
Sustainability
The Group has continued to grow
and we recognise that we have
a responsibility to support our
profitable expansion by operating
in a sustainable manner. As we
continue to manage the impacts of,
and learn from, the recent COVID-19
pandemic, we have demonstrated
we can deliver great client outcomes
in different ways, with the majority
of our staff working flexibly for most
of the year. This will inform our
thinking as to how we can deliver
strong and sustainable shareholder
returns, including investing in new
technology to facilitate sustainable
growth over the longer term.
We consider our ability to address
ESG risks for the business and how
these could affect our stakeholders
as important to our future success
and a subject that we are focused
on addressing.
Our environmental footprint has grown
through the acquisitions completed in
the last two years. We plan to consolidate
our footprint as integration of acquired
businesses continues, ensuring that
wherever possible we minimise any
negative impacts in this area. The modern
design and construction methods used
in our Leicester office mean we are
harnessing the latest technology to
support our environmental aims and,
while this is a major contributor in itself,
we recognise that smaller changes to
how we do things can make incremental
contributions on our journey to net zero.
These include reducing the amount of
paper we use through the adoption of
technology, including an online portal
to deliver client valuations, supporting
our move to a paperless environment. In
addition, our consultancy team is making
increasing use of hybrid and efficient fuel
technology in the vehicles they use.
The Mattioli Woods Responsible Equities
Fund was launched this year and continues
to perform well. We are continuing to
explore how we can offer our clients
access to additional bespoke ‘ESG-
responsible’ investment propositions.
Mattioli Woods plc Annual Report 2022 S
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Charities and communities
Making a difference within our local
communities matters to us and
we continue to have a high level of
engagement in this area. Each year,
we sponsor businesses, sports and
community awards. Our business
has benefited greatly from winning
numerous awards and we feel it is
right to help other businesses reap
the rewards of such accolades. In
addition, we sponsor a variety of
local clubs, business and sports
related events across the country.
In 2019, we launched a national
partnership with Alzheimer’s Research
UK, a charity focused on boosting
research, improving treatments and raising
awareness about dementia. Like many
charities, the impact of the COVID-19
pandemic on Alzheimer’s Research UK
was significant and some of the activities
we had planned to support had to be put
on hold.
We believe dementia is one of the biggest
problems facing health services today
and one that is impacting the lives of
many of our employees and clients. We
will continue to explore ways of engaging
employees, clients and partners to raise
money for Alzheimer’s Research UK and
other charities where and when we can.
We actively engaged both during and post-
pandemic and our successful agreement
with the charity came to an end at the end
of the financial year.
To continue our strong charitable
connections, we recently announced
that the British Heart Foundation will be
our national charity partner for the new
financial year, a charity that embodies the
values and culture of the Group and who
we plan to support nationally.
Every year, the Group’s associate company
Amati has a commitment to donate 10%
of its profits to good causes. We want to
further that tradition and this year asked
our staff to suggest good causes they
felt deserving of a donation. This meant
we could contribute to numerous other
charities throughout the UK that are local
to where our staff live, which has helped
to further enhance our impact on the
communities where we live, with total
charitable donations by the Group and its
employees (through payroll giving) totalling
£0.2m (2021: £0.2m) for the year.
We have also been able to offer work experience placements and summer internships to
provide individuals with experience in financial services, some of which have resulted in
permanent employment.
We recognise that our tax contributions also play an important role for the communities
in which we operate, with the Group’s total tax contribution summarised as follows:
Total tax contribution
Corporation tax
Other taxes borne:
Employer’s National Insurance Contributions
Apprenticeship levy
Business rates
Irrecoverable input VAT
Insurance premium tax
Stamp Duty Land and Stamp Duty Reserve Tax
Taxes collected:
Income tax deducted under PAYE
Employees’ National Insurance Contributions
Output VAT
Total
2022
£000
5,098
5,563
221
614
1,495
127
663
12,421
2,675
5,394
34,271
2021
£000
2,428
2,843
118
570
909
108
153
5,378
1,630
4,579
18,716
Mattioli Woods plc Annual Report 2022F 42
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Chief Executive’s review / Acting and delivering responsibly continued
Advancing opportunities for all
Developing our people
The Group continues to create
opportunities for new recruits and
we operate a trainee consultant
programme for aspiring advisers.
We have continued to operate
our 26-week plan to foster small
groups of trainee advisers in a
classroom setting, two days a
week, and have successfully
delivered these remotely.
Each week is themed, including topics
such as tax, pensions and investments,
and aims to get trainees who have
been with the Company for 18 months
and have completed their level 4
qualification to the point where they are
able to develop financial plans.
Trainees work alongside consultants in
administrative roles and attend consultant-
led client meetings. The scheme will
continue to be rolled out for new groups
of employees who demonstrate the
potential to move into consultant roles
at the firm. Mattioli Woods’ graduate
and apprenticeship schemes have been
running for a number of years and,
together with the trainee consultant
programme, highlight the firm’s motivation
to ‘grow our own’, and we plan to increase
the number of applicants accepted by
the Group as we encourage new talent to
begin and develop their careers with us.
The Group also operates graduate and
apprenticeship schemes in other teams
including Finance, HR and Marketing,
where on the job learning is supported
by study towards an externally
recognised qualification.
Equal opportunities
employer including
diversity and inclusion
We are committed to promoting
equality of opportunity for all
employees and job applicants. We
aim to create a working environment
in which all individuals are able to
make best use of their skills, free from
discrimination or harassment, and in
which all decisions are based on merit.
At Mattioli Woods, we wish to ensure that
our employees can achieve their potential
and therefore we encourage promotions
and to progress from within. We aim
to ensure that no job applicant suffers
discrimination because of any of the
protected characteristics. Our recruitment
procedures are reviewed regularly to
ensure that individuals are treated on the
basis of their relevant merits and abilities.
Job selection criteria are regularly reviewed
to ensure that they are relevant to the job
and are not disproportionate.
We are an equal opportunities employer
and understand that talent is not directed
by ethnicity, race, gender / gender identity,
sexual orientation, religion, age, disability,
pregnancy, maternity, background or
social class.
Our vision is to have a respectful and
supportive workplace that enables us to
attract and retain a diverse and inclusive
workforce that represents our clients and the
communities across the country. We believe
we can achieve this by attracting, retaining
and developing a talented workforce, and
recruiting candidates who believe in our
vision and culture.
The principles of non-discrimination and
equality of opportunity also apply to the
way in which employees treat clients,
customers, suppliers, shareholders and
all other stakeholders.
Working for Mattioli Woods
is inspiring and exciting
with the opportunity to
learn something new every
day - this year saw the
introduction of our new
finance system. The support
and guidance received from
colleagues, alongside a
positive work environment
means I am proud to be a
part of the Mattioli Woods
Group.
Madina Kadri
Purchase Ledger Controller
Mattioli Woods plc Annual Report 2022 S
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Diversity metrics
Employee Diversity
Male
Female
45%
55%
Employee Age
Under 30
30 to 50
Above 50
23%
50%
27%
Mattioli Woods plc Annual Report 2022F 44
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Chief Executive’s review / Acting and delivering responsibly continued
Advancing opportunities for all continued
What do our people think?
I love the diversity in my
role but more importantly
the team I work with - I
have a fantastic team.
I regularly interact with all
areas of the business which
allows me to build great
relationships with so many
of our colleagues across
the Group.
Ben Williams
Senior Marketing Partner
I feel fortunate to be part
of the People team. If
somebody needs help,
everyone steps forward
to volunteer. We ensure
effective communication
and regular interactions
are central to what we
do which supports our
positive culture.
Scott Matthews
Wellbeing and Safety Partner
The support I receive from
Mattioli Woods means
going the extra mile is easy
when you are surrounded
by people and a team who
appreciate and recognise
your efforts.
Hannah Cliff
Support Team Manager
Mattioli Woods plc Annual Report 2022 S
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Approval
The Strategic Report contains certain
forward-looking statements, which are
made by the Directors in good faith based
on the information available to them at
the time of their approval of this Annual
Report. Statements contained within
the Strategic Report should be treated
with some caution due to the inherent
uncertainties (including but not limited to
those arising from economic, regulatory
and business risk factors) underlying any
such forward-looking statements. The
Strategic Report has been prepared by
Mattioli Woods to provide information to
its shareholders and should not be relied
upon for any other purpose.
Pages 1 to 45 constitute the Strategic
Report, which has been approved by the
Board of Directors and signed on its
behalf by:
Ian Mattioli MBE
Chief Executive Officer
12 September 2022
Modern slavery
Mattioli Woods welcomed the
introduction of the Modern Slavery
Act 2015 and recognises it has
a responsibility to take a robust
approach and commitment to
preventing modern slavery and
human trafficking in all its activities,
and in our supply chains.
To enable us to assess whether a
particular activity is at high risk of
facilitating modern slavery or human
trafficking:
• Mattioli Woods holds a register of
all its operations, regularly reviewing
this in the context of its supply chain
and business operations; and
• There are no high-risk activities
identified which relate to modern
slavery or human trafficking. The
Group operates in the UK in financial
services and does not source products
or services from higher risk regions.
To understand and respond to potential
modern slavery and human trafficking
risks, our employees are given training
while our suppliers are also made aware
of our expectations. A copy of our
Modern Slavery and Human Trafficking
Statement can be found on our website.
We also review our salaries on an annual
basis to ensure our employees are
not paid below the national minimum
wage. We are an established partner
with Living Wage Foundation, priding
ourselves on ensuring that all our
employees are paid above the national
minimum wage. We provide a package
of benefits to all employees, including
pension auto-enrolment, income
protection and healthcare irrespective
of the employee’s role in the Group.
In September 2021, all employees’
benefits were reviewed with some of
the benefits being enhanced. In addition,
there is an annual salary review can
result in the grant of a pay award, as well
as a discretionary bonus.
Anti-bribery policy
We value our reputation for
ethical behaviour and upholding
the utmost integrity and we
comply with the FCA’s clients’
best interests rule. We understand
that in addition to the criminality
of bribery and corruption, any
such crime would also have an
adverse effect on our reputation
and integrity.
Mattioli Woods has a zero tolerance
approach to bribery and corruption and
we ensure all of our employees and
suppliers are adequately trained to limit
our exposure to bribery by:
• Setting out clear anti-bribery and
corruption policies;
• Providing mandatory training to all
employees;
• Encouraging our employees to be
vigilant and report any suspected
cases of bribery in accordance with
the specified procedures; and
• Escalating and investigating instances
of suspected bribery and assisting
the police or other appropriate
authorities in their investigations.
Gender pay reporting
The Equality Act 2010 (Gender
Pay Gap Information) Regulations
2017 requires all employers with
250 or more employees in the UK
to publish details of their gender
pay gap.
Its aim is to achieve greater transparency
about gender pay difference. The
analysis is based on data as at 5 April of
each year and shows the differences
in the average pay between men and
women. We will issue a further Gender
Pay Gap report in April 2023.
Read more on our website at:
www.mattioliwoods.com/gender
Mattioli Woods plc Annual Report 2022F
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Advertorial
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Mattioli Woods plc Annual Report 2022 S
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Simple and convenient
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Mattioli Woods plc Annual Report 2022F 48
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Governance overview
Operating with integrity
and business ethics
The Board is committed to achieving high
standards of corporate governance, integrity
and business ethics. We recognise the need
to ensure an effective governance framework
is in place to give all our stakeholders
confidence that the business is effectively
run, ensuring good outcomes for our clients
and looking after the interests of the Group’s
shareholders and other stakeholders.
Board of Directors
The PLC Board was strengthened in the previous year to ensure
that we continue to have a balanced and diverse board, with
plans to further enhance these being developed. Following
the conclusion of an independently led recruitment process,
David Kiddie was appointed as Independent Non-Executive
Chair in March 2022, bringing significant asset management
and investment oversight expertise and international senior
executive experience.
The Board currently comprises four Executive Directors and
four Independent Non-Executive Directors, including the
Chair. The Company has a balanced Board, which we believe
represents the right governance structure for the business
having been independent for several years with majority
Independent Non-Executive Directors. The current Board
includes a Senior Independent Director in addition to the other
Non-Executive Directors.
The Nomination Committee leads on the succession plan
for all Board members including recruitment, as seen in the
appointment of the new Independent Non-Executive Chair.
A short biography of each Director is set out on pages 50 and 51.
Board structure
The Board has established a sub-committee structure comprising
Risk and Compliance, Audit, Remuneration and Nomination
Committees. During the financial year ended 31 May 2022 the
Group undertook an internal review of the effectiveness of the
Board, its sub-committees and the senior management framework.
We created a new executive team forum designed to improve
execution of strategy, corporate governance and risk management
frameworks as determined by the Board, as well as bringing
together a senior executive team with responsibility for operational
oversight of all key areas in the Group, illustrated as follows:
PLC Board
Risk and
Compliance
Committee
Remuneration
Committee
Nomination
Committee
Audit
Committee
Executive Committee
The executive and senior management team is structured by a primary
Executive Committee, which is supported by a structured number of
commercial and operational committees across the Group.
The Group’s investment and asset management business is
managed through the Investment and Asset Management
Committee, which ensures risk and investment controls are
applied consistently throughout the Group, across all our various
products and services.
Each operating subsidiary is managed by its own board, which
reports to the relevant commercial and operational committee,
with clear line of sight to the Executive Committee. We believe this
is the optimal management structure to secure continued growth.
Mattioli Woods plc Annual Report 2022 S
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The Board has adopted the Quoted
Companies Alliance (“QCA”) revised
Corporate Governance Code (“QCA Code”),
which requires the Group to apply 10
principles focused on the pursuit of medium
to long-term value for shareholders and also
to publish certain related disclosures.
Corporate governance principles
applicable to the Group
The 10 QCA Code corporate governance principles,
which apply to the Group, are:
1.
Establish a strategy and business model which promotes
long-term value for shareholders.
2.
Seek to understand and meet shareholder needs
and expectations.
3.
Take into account wider stakeholder and social
responsibilities and their implications for long-term success.
4.
Embed effective risk management, considering both
opportunities and threats, throughout the organisation.
5.
Maintain the Board as a well-functioning, balanced team led
by the Chair.
6.
Ensure that between them the Directors have the necessary
up-to-date experience, skills and capabilities.
7.
Evaluate Board performance based on clear and relevant
objectives, seeking continuous improvement.
8.
Promote a corporate culture that is based on ethical values
and behaviours.
9.
Maintain governance structures and processes that are fit for
purpose and support good decision-making by the Board.
10.
Communicate how the Company is governed and is
performing by maintaining a dialogue with shareholders and
other relevant stakeholders.
Application of the QCA Code and required disclosures
The QCA Code requires us to apply the principles set out above
and to publish certain related disclosures in our Annual Report,
on our website, or a combination of the two. We have followed
the QCA Code’s recommendations and have provided disclosure
relating to all principles in a corporate governance statement on
our website and summarise our compliance with the following
principles in this Annual Report.
Strategy and business model – QCA Principle One
The Group’s strategy and business model is described in our
Strategic Report on pages 4 and 5.
Effective risk management – QCA Principle Four
The Group embeds risk management throughout the organisation
and this is described on pages 52 to 53.
Board balance and skills – QCA Principles Five and Six
The Board, led by the Chair, has the necessary skills and knowledge
to discharge its duties and responsibilities effectively, setting clear
expectations and ensuring stringent measures for corporate
governance standards are met, particularly in relation to executive
remuneration, risk, compliance and audit. The Executive and Non-
Executive Directors’ skill sets are complementary, and together
provide a blend of broad commercial, operational, investment, legal,
and financial expertise. The skill set is suitably broad and sufficiently
high calibre such that all decision-making at Board level is robust and
mindful of the fiduciary responsibilities that need to be discharged to
all shareholders.
In addition, the Directors are aware of the importance of keeping
abreast of the industry’s current activities and industry conferences,
webinars and events throughout the year to keep their skills, contacts
and knowledge current and simultaneously engage with the regulator,
other operators and service providers to the financial services industry.
Board effectiveness – QCA Principle Seven
The Board began the process to undertake a self-evaluation during
the financial year ending 31 May 2022 which is expected to complete
in the year ending 31 May 2023 and annually thereafter. The criteria
against which the Board collectively and individually will be assessed
include Board composition, roles and responsibilities, meetings
and administration, Board committees, Board discussions, Board
relationships and stewardships, monitoring and evaluation, strategy
and internal control.
The aim of the Board evaluation is to review the effectiveness of the
Board’s performance and assess its strengths as well as areas for
development. The Board has considered the Company’s approach to
succession planning and will work with the Nomination Committee
on the Board evaluation process. The Executive Management Team
and, at a more junior level, senior departmental managers address
progression of employees through annual appraisals and competency
reviews. The Group’s structured ‘Financial Assess’ training programme
further assists key managers with training and learning opportunities.
Ethical culture – QCA Principle Eight
The Group’s client centric and ethical culture are discussed in the
Chair’s statement on pages 8 and 9 and also in the Chief Executive’s
review on pages 12 to 45, and the business model is described in our
Strategic Report on page 4.
Governance and communication with stakeholders – QCA
Principle Ten
The governance structures and committees utilised across the
Group are discussed in the Corporate governance report on pages
52 to 59. Details of interactions with stakeholders are shown in the
Section 172 statement on pages 33 to 37. In addition, the Directors’
remuneration report is shown on pages 60 to 65.
Mattioli Woods plc Annual Report 2022F 50
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Board of Directors
The Mattioli Woods Group Board
N
RC
David Kiddie
Independent Non-Executive
Chair and Chair of Nomination
Committee
Appointed to the Board: 2021
Tenure at Mattioli Woods: 2 years
Brings to the Board:
• Significant experience and
expertise in asset management
and investment oversight
• Strategic planning and
leadership
• Focus on governance,
oversight and regulatory
environment
Previous roles:
• Chief Executive UK and Head
of Institutional Business, BNP
Paribas Investment Partners
• Chief Investment Officer,
AMP Capital Investors, ABN
AMRO Asset Management and
Rothschild Asset Management
• Head of Equities, Baring Asset
Management
• Group Executive, Perpetual
Investments (Australia)
Accreditations:
• BA Hons Economics,
University of Kent
External appointments:
• Non-Executive Director of
Marlborough Investment
Management Ltd
Ian Mattioli MBE
Chief Executive Officer
Ravi Tara
Chief Financial Officer
Michael Wright
Group Managing Director
Co-founded Mattioli Woods
in 1991
Tenure at Mattioli Woods: 31 years
Brings to the Board:
• 35+ years’ experience in
financial services, wealth
management and property
businesses
• Co-founded Mattioli Woods,
with Bob Woods MBE, in 1991
• Vision and strategy
• Development of investment
proposition
• Founder of Custodian REIT plc
Accreditations:
• Awarded an MBE for
services to business and the
community in 2017
• LSE AIM Entrepreneur of the
Year Award, 2008
• CEO of the Year Award,
City of London Wealth
Management Awards, 2018
• Awarded Honorary Degree
(Doctorate of Laws),
University of Leicester, 2022
• Appointed High Sheriff of
Leicestershire for 2021-22
External appointments:
• Non-Executive Chair of K3
Capital Group plc
• Non-Independent Director
Appointed to the Board: 2021
Tenure at Mattioli Woods: 3 years
Brings to the Board:
• Strategic planning and value
Appointed to the Board: 2021
Tenure at Mattioli Woods: 18 years
Brings to the Board:
• Over 17 years’ experience
in financial services
• Experienced adviser,
assisting controlling
directors, owner-managers
and affluent individuals
• Inspiring leadership and
operational management
• Acquisition and integration
expertise
• Change and efficiency
management
Accreditations:
• Diploma in Financial
Planning
• LLB Law Degree, University
of Leicester
External appointments:
• Vice-President of Gresley
Male Voice Choir
creation
• Financial management and
oversight of operations
• Investor relations
management
• Operational efficiency and
improvement
• Mergers and acquisitions
and integration experience
• Inspiring leadership and
development of teams
• Change management
Previous roles:
• Capita plc
• Weetabix Food Company
• JP Morgan
• Barclays Capital
• PwC
Accreditations:
• Chartered Accountant
• Fellow of the Institute of
Chartered Accountants
in England and Wales
(“ICAEW”)
• A member of the ICAEW’s
Corporate Finance Faculty
• Non-Executive Director of
of Custodian REIT plc
Trade Union Fund Managers
Limited and Trade Union
Financial Management
Services Limited
• Executive Director of David
Kiddie Investment Solutions
Limited
Mattioli Woods plc Annual Report 2022 S
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Committee membership key
Member of the Audit Committee
A
Member of the Remuneration Committee
R
N
Member of the Nomination Committee
Denotes Committee Chair
Member of the Risk and Compliance Committee
RC
Iain McKenzie
Chief Operating Officer
Appointed to the Board: 2021
Tenure at Mattioli Woods: 4 years
Brings to the Board:
• People and change
management
• Operational and process
efficiency
• Understanding of business
functions and risk
management
• Strategic planning and
project management
• Data analysis and
performance metrics
• Organisational and
leadership abilities
Previous roles:
• Business consultancy
• Senior management
Accreditations:
• BA Design Management,
De Montfort University,
Leicester
External appointments:
• Director of Leicestershire
Business Voice
NA
R RC
A
RC
A
R
RC
Edward Knapp
Non-Executive Director and
Chair of Risk and Compliance
Committee
Martin Reason
Non-Executive Director
and Chair of Remuneration
Committee
Appointed to the Board: 2021
Tenure at Mattioli Woods: 2 years
Brings to the Board:
• Significant commercial
and strategic insight and
transformation expertise
• Digital, technology and IT
development within financial
services
• Risk and compliance
oversight and control
• Asset management and
advisory expertise
Previous roles:
• Managing Director and
Global Head of Business
Management, Technology,
HSBC
• Chief Operating Officer and
Global Head of Business
Management, Risk, Barclays
• Senior Adviser, McKinsey &
Company
Accreditations:
• BA Mathematics, Balliol
College, University of Oxford
External appointments:
• Non-Executive Director of
F&C Investment Trust Plc
• Senior Adviser to Board
of Perenna FinTech and
previously Revolut
• Director of Asia House
Appointed to the Board: 2021
Tenure at Mattioli Woods: 2 years
Brings to the Board:
• Development of strategic
plan focusing on client
outcomes and marketing
• Risk management and
controls
• Process design and
operational efficiency
• Remuneration and people
strategies
Previous roles:
• Chief Executive Officer,
Melton Mowbray Building
Society
• Managing Director, Merrill
Lynch HSBC
• HSBC/Midland Bank
• Managing Director,
Pakawaste Group
Accreditations:
• High performance leadership
diploma, Cranfield School of
Management
• BSc Hons Banking and
Finance
External appointments:
• Chair of Sitigrid Ltd
Anne Gunther
Senior Independent Director and
Chair of Audit Committee
Appointed to the Board: 2016
Tenure at Mattioli Woods: 6 years
Brings to the Board:
• 40+ years’ experience in retail
financial services
• Wide executive experience
from lending to wealth
management
• FTSE 100 IPO experience
• Mergers and acquisitions
experience
Previous roles:
• Managing Director – Direct,
Lloyds TSB
• Chief Executive, Standard Life
Bank
• Chief Executive, Standard Life
Healthcare
• Member of group executive,
Standard Life
• Founding Director, Standard
Life Wealth
• Chair, Warwick Business School
Accreditations:
• Honorary doctorate, Edinburgh
University
• Chartered Banker
• MBA, Warwick Business School
• BSc Hons Physics, Nottingham
University
External appointments:
• Non-Executive Director of
Water Plus Group Limited (a
jointly-owned subsidiary of
United Utilities plc and Severn
Trent plc)
• Non-Executive Director of
West Brom Building Society
Mattioli Woods plc Annual Report 2022F 52
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Corporate governance report
Time commitments of Board members
The Group embraces the benefits that are brought by a Board from a range of business backgrounds and who are actively involved
in other businesses. The Board also recognises its members must be able to dedicate sufficient time to the Company. The Board has
considered the time commitments of each Director and is comfortable that each has sufficient available capacity to carry out the
required duties for Mattioli Woods:
• David Kiddie’s time commitment from his other Directorships averages four working days per month;
• Ian Mattioli’s time commitment from his roles as Non-Executive Chair of K3 Capital Group plc and Non-Executive Director
of Custodian REIT plc average two and one and a half working days per month respectively;
• Michael Wright’s time commitment from other Directorships averages one day per quarter;
• Iain McKenzie’s time commitment from other Directorships averages two days per month;
• Anne Gunther’s time commitment from her other Directorships averages four and a half working days per month;
• Edward Knapp’s time commitment from his other Directorships averages four working days per month; and
• Martin Reason’s time commitments from his other Directorship averages four days per month.
Operation of the Board
The Board is responsible to shareholders for the proper management of the Group and has a formal schedule of matters specifically
reserved to it for decision. These include strategic planning, business acquisitions and disposals, authorisation of major capital expenditure
and material contractual arrangements, setting policies for the conduct of business and approval of budgets and financial statements. As
part of our ongoing focus on corporate governance, the Board reserved matters and committee terms of reference were reviewed and
updated during the year, in light of the focus on stakeholder engagement and linking a company’s purpose and values to its strategy.
Other matters are delegated to the Executive Management team, supported by policies for reporting to the Board. The Company maintains
appropriate insurance cover in respect of legal action against the Company’s Directors, but no cover exists in the event that a Director is
found to have acted fraudulently or dishonestly.
The agenda and relevant briefing papers are distributed by the Company Secretary on a timely basis, usually a week in advance of each
Board meeting.
The roles of Chair and Chief Executive are distinct, as set out in writing and agreed by the Board. The Chair is responsible for the
effectiveness of the Board, directing strategy and ensuring communication with shareholders. The Chief Executive is responsible for
overseeing the delivery of this strategy and the day-to-day management of the Group by the Executive Management team. The Board
is committed to developing the corporate governance and management structures of the Group to ensure they continue to meet the
changing needs of the business.
The Non-Executive Directors are considered by the Board to be independent of management and free from any relationship that might
materially interfere with the exercise of independent judgement. The Board does not consider the Non-Executive Directors’ shareholdings
to impinge on their independence. The Non-Executive Directors provide a strong independent element to the Board and bring experience
at a senior level of business operations and strategy. Anne Gunther is the Senior Independent Director.
All Directors have access to the Company Secretary, who is responsible for ensuring that Board procedures and applicable rules and
regulations are observed. Any Director, on appointment and throughout their service, is entitled to receive any training they consider
necessary to fulfil their responsibilities effectively, including training on quoted company requirements from the Nominated Adviser,
Canaccord Genuity Limited.
The Board meets regularly throughout the year as well as on an ad hoc basis, as required by time critical business needs, and is the principal
forum for directing the business of the Group.
Board committees
The Board has delegated authority to four committees. The Chair of each committee provides a report of any meeting of that committee
at the next Board meeting. The Chair of each committee is present at the AGM to answer questions from shareholders.
Risk and Compliance Committee
The Risk and Compliance Committee comprises Edward Knapp (Chair), Anne Gunther, David Kiddie, Martin Reason and Joanne Lake up
to the point of her stepping down from the Board in April 2022. Committee meetings are normally attended by George Houston (Group
Compliance Officer) as Compliance Oversight Function, the Chief Executive, Group Managing Director, Chief Operating Officer, and by
representatives of the external and internal auditors by way of invitation. In addition, senior managers and representatives from the internal
audit, risk and compliance functions attend committee meetings as necessary.
The Risk and Compliance Committee is principally responsible for monitoring identified risks and the effectiveness of mitigating action,
keeping risk assessment processes under review, reviewing the impact of key regulatory changes on the Group, assessing material breaches
of risk limits and regulations as well as reviewing client complaints.
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Risk management framework
The Group’s risk management framework is designed to ensure risks are identified, managed and reported effectively. The Group has
invested in its risk management framework to meet the requirements of key regulatory changes and the risk management framework
remains subject to ongoing review.
We continue to apply a ‘three lines of defence’ model to support our risk management framework, with responsibility and accountability
for risk management summarised as follows:
• First line: Senior management and operational business units are responsible for managing risks, by developing and maintaining
effective internal controls to mitigate risk. First-line systems and controls are employed to ensure business activities are conducted
in compliance with internal policies and procedures. First-line supervision teams carry out monitoring of business activities on
a day-to-day basis.
• Second line: The risk, compliance and anti-money laundering functions maintain a level of independence from the first line. They are
responsible for providing oversight and challenge of the first line’s day-to-day management, monitoring and reporting of risks to both
senior management and governing bodies.
• Third line: The internal audit function is responsible for providing independent assurance to both senior management and governing
bodies as to the effectiveness of the Group’s governance, risk management and internal controls.
Output from first, second and third-line monitoring is reported to the managers and management information is reported to the Executive
Risk and Compliance Committee and the Risk and Compliance Committee.
Risk appetite
Risk appetite is defined as both the amount and type of risk the Group is prepared to accept or retain in pursuit of our strategy. Our appetite
is subject to regular review to ensure it remains aligned to our strategic goals. At least annually, the Board, Executive Risk and Compliance
Committee and the Risk and Compliance Committee will formally review and approve the Group’s risk appetite statement and assess
whether the firm has operated in accordance with the stated risk appetite measures during the year.
Notwithstanding its continued expectations for business growth, the Board retains a relatively low overall appetite for risk, ensuring that our
internal controls mitigate risk to appropriate levels.
Risk assessment process
Identified risks are tracked in a department-level risk register and used as the basis for a consolidated risk register that provides the Risk and
Compliance Committee with an overview of the key risks across the organisation. The Board and senior management are actively involved
in a continuous risk assessment process as part of our risk management framework, supported by the new annual ICARA process which
assesses the principal risks facing the Group.
Stress tests include consideration of the impact of a number of severe but plausible events that could impact the business. The work
also takes account of the availability and likely effectiveness of mitigating actions that could be taken to avoid or reduce the impact or
occurrence of the underlying risks.
The Group’s risk assessment process considers both the impact and likelihood of risk events that could materialise, affecting the delivery of
strategic goals and annual business plans. A top-down and bottom-up approach ensures that our assessment of key risks is challenged and
reviewed on a regular basis throughout the year, with the Board and its committees receiving regular reports and information from senior
management, operational business units and the risk oversight functions.
Activities during the year
The committee met six times during the year, with the committee’s activities during the year including:
• Review and challenge of the key components of the Group’s risk management framework;
• Review and challenge of the Group’s treating customers fairly (“TCF”) and conduct risk policies and outcomes;
• Review and challenge of the Group’s vulnerable client processes;
• Review and challenge of the Group’s product governance processes;
• Review of recommendation of the Group’s risk appetite statement including key risk indicators and tolerance for key risks to the Board
and review of the risk register;
• Review and challenge of the ICAAP, exploring scenarios and stress tests to determine an appropriate regulatory capital requirement
prior to recommendation to the Board;
• Review of the Group’s training and competence regime;
• Oversight of the implementation of Markets in Financial Instruments Directive 2 (“MiFID II”);
• Approval of the Compliance monitoring plan for the year including implementation of identified actions for improvement; and
• Approval of the Compliance manual.
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Corporate governance report continued
Audit Committee
The Audit Committee comprises Anne Gunther (Chair), Edward Knapp, Martin Reason and Joanne Lake until her stepping down from the
Board in April 2022. Anne Gunther is a Chartered Banker and the Board is satisfied that all members of the committee have recent and
relevant financial experience. The Board believes the committee is independent, with all members being Non-Executive Directors.
The key responsibilities of the Audit Committee are:
• To review the reporting of financial and other information to the shareholders of the Company and to monitor the integrity
of the financial statements;
• To review the Group’s accounting procedures and provide oversight of significant judgement areas;
• To review the firm’s internal controls and effectiveness of the internal audit function;
• To review the effectiveness of the external audit process and the independence and objectivity of the external auditors;
• To review audit fees and proposals for future years; and
• To report to the Board on how it has discharged its responsibilities.
Committee meetings are normally attended by the Chief Executive, Chief Financial Officer, Head of Financial Reporting, Chief Operating
Officer, Group Compliance Officer and by representatives of the external and internal auditors by way of invitation. The presence of other
senior executives from the Group may be requested. The committee meets with representatives of the internal and external auditors,
without management present, at least once a year.
Activities during the year
The committee met five times during the year, where it considered the significant financial and audit issues, the judgements made in
connection with the financial statements and reviewed the narrative within the Annual Report and the Interim Report.
During the year, the Audit Committee continued to monitor the operation of the internal audit function, which has been outsourced to
RSM Risk Assurance Services LLP since December 2018. In light of an ever-changing regulatory environment, outsourcing gives the Group
access to greater skills externally, while having the ability to shrink or expand our internal audit activities to meet the ongoing demands of
the business and in response to the impact of the uncertainty created by the pandemic.
The committee also considered the tender and subsequent appointment of, and fees payable to, the external auditors and discussed with
them the scope of the interim review and annual audit for the Group and subsidiaries of the Group.
Specific audit issues the committee discussed included:
• Oversight and approval of the process to change external auditor as delegated from the Board. This included leading the tender
process through to assessment of the various audit proposals and selection of the preferred auditor;
• Assessment of whether each entity and the Group as a whole are going concerns, including whether forecast performance would
result in an adequate level of headroom over the Group’s available cash facilities;
• Review of whether any impairment needed to be recognised in respect of the intangible assets of the Group, including
the assumptions underlying the calculation of the value in use of the cash generating units tested for impairment;
• Management’s approach to estimating the recoverability of WIP, including the recovery rate applied and the length of historical
data used to calculate that recovery rate;
• Provisions recognised in respect of contingent consideration payable on past business combinations and management’s key
assumptions and estimates applied in reaching these recognition and measurement decisions; and
• Review and approval of the internal audit plan.
Significant judgements and estimates
Significant critical accounting judgements and key estimates in connection with the Group’s financial statements for the year ended
31 May 2022 and other matters considered by the committee included:
Goodwill and intangible assets
As set out in Note 17 to the Group financial statements, at 31 May 2022, the Group had goodwill of £17.9m (2021: £37.2m) with other
intangible assets relating to client portfolios amounting in total to £112.2m (2021: £40.9m). Under IFRSs, these balances are assessed
annually for impairment. Impairment testing requires the application of judgement, largely around the assumptions that are built into
the calculation of the value in use of the cash generating unit being tested for impairment.
The committee considered the impairment reviews carried out by management. These reviews focused on the assumptions underlying
the calculation of the value in use of the cash generating units tested for impairment. The underlying cash flow assumptions were
challenged by management and the committee, having regard to historical performance. This was supported by the challenge to the
Group’s budgets earlier in the year.
The main assumptions reviewed by the committee were the achievability of long-term business plans and the discount rate used as
outlined in Note 19. These assumptions were subject to sensitivity analysis by management, which was also reviewed by the committee.
The committee concluded that the carrying values of goodwill and intangibles included in the financial statements are appropriate.
Mattioli Woods plc Annual Report 2022 S
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Revenue recognition
The Group recognises accrued income in respect of time costs and disbursements incurred on clients’ affairs during the accounting
period, which have not been invoiced at the reporting date (“work in progress” or “WIP”). This requires an estimation of the recoverability
of the time costs and disbursements incurred but not invoiced to clients. The carrying amount of accrued time costs and disbursements
at 31 May 2022 was £5.1m (2021: £4.2m).
The committee considered management’s approach to estimating the recoverability of WIP, including the recovery rate applied and the
length of historical data used to calculate that recovery rate.
The committee concluded that the valuation of accrued WIP in the financial statements is appropriate.
Acquisition accounting
Business combinations are accounted for using the purchase accounting method. This involves assessing the fair value of the assets
acquired and whether any assets acquired meet the criteria for recognition as separately identifiable intangible assets. Intangible assets are
measured on initial recognition at their fair value at the date of acquisition.
Client portfolios are valued by discounting their expected future cash flows over their expected useful lives, based on the Group’s historical
experience. Expected future cash flows are estimated based on the historical revenues and costs associated with the operation of that client
portfolio. The discount rates used estimate the cost of capital, adjusted for risk.
The committee reviewed the purchase price allocations prepared by management, supported by appointed third-party experts where
required, on the purchase of Maven Capital Partners UK, Richings Financial Management and Ludlow Wealth Management Group during
the year. These reviews focused on the underlying cash flow assumptions and the discount rate used to determine the present value of the
cash flows attributable to the subject intangible assets.
The committee concluded that the fair values of the identifiable assets and liabilities of these acquired businesses as at their respective
dates of acquisition included in the financial statements are appropriate.
Contingent consideration payable on acquisitions
The Group has entered into certain acquisition agreements that provide for a contingent consideration to be paid. A financial instrument
is recognised for all amounts management anticipates will be paid under the relevant acquisition agreement. This requires management
to consider whether contingent payments should be accounted for as consideration or remuneration, make an estimate of the expected
future cash flows from the acquired business and determine a suitable discount rate for the calculation of the present value of any
contingent consideration payments. The carrying amount of contingent consideration provided for at 31 May 2022 was £8.7m (2021:
£2.9m), and contingent consideration recognised as remuneration provided for at 31 May 2022 was £7.8m (2021: £4.0m).
The committee considered management’s assessment of the amounts that will be paid under the relevant acquisition agreements.
These reviews focused on the assumptions underlying the cash flows covering the contingent consideration period.
Following this review, the committee was satisfied that the judgements exercised were appropriate and that the contingent consideration
payable on acquisitions was fairly stated in the financial statements.
Other liability provisioning
As detailed in Note 26, the Group recognises provisions for client claims, commission clawbacks, dilapidations, onerous contracts and
other obligations that exist at the reporting date. These provisions are estimates and the actual amount and timing of future cash flows
are dependent on future events.
Management reviews these provisions at each reporting date to ensure they are measured at the current best estimate of the expenditure
required to settle the obligation. Any difference between the amounts previously recognised and the current estimate is recognised
immediately in the statement of comprehensive income.
The committee considered and challenged the nature of the provisions, the potential outcomes, any developments relating to specific
claims, and the prior history of obligations, provisions and claims in order to assess whether the provisions recorded are prudent and
appropriate.
The committee discussed with management the key elements of judgement to assure themselves as to the adequacy and appropriateness
of the provisions. Following this discussion, the committee was satisfied that the judgements exercised were appropriate and that the
provisions were fairly stated in the financial statements.
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Corporate governance report continued
Use of alternative performance measures
The Group has identified certain measures that it believes will assist in the understanding of the performance of the business. These
measures are not defined under IFRS but can be used, subject to appropriate disclosure in the Annual Report and Accounts. These
alternative performance measures are recurring revenue, adjusted EBITDA, adjusted profit before tax, adjusted profit after tax and adjusted
earnings per share as set out in the Alternative performance measure workings section of the Annual Report.
The committee considered the measures and felt that these alternative performance measures are those considered by management to be
important comparables and key measures used within the business for assessing performance. They are not substitute for, or superior to,
any IFRS measures.
The committee was also satisfied that the disclosure of the alternative performance measures was appropriate.
Other matters
In addition to the above matters, the committee assessed whether each entity and the Group as a whole are going concerns.
The committee also reconsidered a number of other judgements made by management including: IFRS 15 ‘Revenue from contracts with
customers’, IFRS 9 ‘Financial instruments’ and IFRS 16 ‘Leases’.
The committee considered whether the forecast financial performance would result in an adequate level of headroom over the Group’s
available cash facilities. The committee also discussed the key assumptions underpinning the Group’s forecast financial performance
with management regularly during the year and considered a range of sensitivities to those forecasts, together with the feasibility and
effectiveness of mitigating factors. The committee concluded there are no material uncertainties that cast doubt about the Group’s ability
to continue as a going concern and that the adoption of the going concern basis is appropriate.
The committee considered management’s approach, proposed disclosures, assessment of impact on the financials and the judgements
made in relation to impairment allowances and the factors considered around expected credit losses on financial instruments.
External auditor
An analysis of fees payable to the external audit firms in respect of audit and non-audit services during the year is set out in Note 7 to the
financial statements. The Company is satisfied the external auditor is independent in the discharge of their audit responsibilities, following
diligence conducted as part of the appointment process.
Internal audit
The internal audit function is responsible for providing assurance over the design and operational effectiveness of the internal controls
related to the Group’s key activities. Our internal audit activity is based around a strategic, risk-based approach to cyclical internal audit
with consideration of the Group’s key strategic priorities and risks. This approach is designed to provide assurance over key areas including:
governance, risk management and control. During the year the internal audit function engaged in a number of activities, including:
• Developing our internal audit plan based on an analysis of the Group’s corporate objectives, risk profile and assurance framework,
as well as other factors such as emerging issues in our sector;
• Delivering audits providing assurance over the Group’s governance arrangements, financial crime and whistleblowing
activities, complaints, HR and training activities, wealth management services, cyber risk, investment services as well as client
communications, costs and charges;
• The internal audit team has also continued to provide assurance activities in respect of the CREIT and going forward, the 2022/23
plan extends to coverage of Maven activity;
• Looking ahead, the internal audit function has developed a forward-looking plan to provide the Group with assurance over key
areas of regulatory focus into 2022/23 including the Investment Firms Prudential Regime (IFPR), vulnerable clients, operational
resilience and product governance and pricing. The Plan is complemented with additional reviews on core business areas e.g. client
invoicing, integration management and conflicts of interest as well as work due under a cyclical approach and regulatory reporting.
As the third line of defence, the internal audit function (together with the external auditors in connection with their audit of the financial
statements) continues to build risk awareness within the organisation by challenging the first and second lines of defence to continue
developing and enhancing the internal control framework.
Remuneration Committee
The Remuneration Committee comprises Martin Reason (Chair), David Kiddie, Anne Gunther and Joanne Lake until her stepping down
from the Board. The committee meets not less than twice a year. It is responsible for determining and reviewing the Group’s policy on
executive remuneration and other benefits and terms of employment, including performance-related bonuses and share options. The
committee also administers the operation of the share option and share incentive schemes established by the Company.
The members of the Remuneration Committee have no personal interest in the outcome of their decisions and seek to serve the
interests of shareholders to ensure the continuing success of the Company. The remuneration of the Non-Executive Directors is
determined by the Board itself. No Director is permitted to participate in decisions concerning their own remuneration.
Mattioli Woods plc Annual Report 2022 S
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The committee met four times during the year with key items considered including:
• Review and approval of the Group’s remuneration policy;
• Annual review of Executive Directors’ and other senior managers’ base salaries and bonus arrangements including specific approvals
for changes or payments made during the year;
• Awards to be granted under the share option and incentive schemes established by the Company;
• Trends and benchmarking of executive pay in the wider market; and
• Appointment of external advisers to provide analysis relating to the Company’s remuneration compliance requirements.
The Committee continues to review the Group’s long-term incentive plans to ensure it can continue to attract, retain and incentivise
appropriately qualified staff to achieve its goals.
Nomination Committee
The Nomination Committee comprises David Kiddie (Chair), Anne Gunther, Edward Knapp, Ian Mattioli and Joanne Lake until her
stepping down from the Board. The Committee is responsible for reviewing the size, structure and composition of the Board, establishing
appropriate succession plans for the Executive Directors and other senior executives in the Group and for the nomination of candidates
to fill Board vacancies where required.
The committee works in close consultation with the Executive Directors and met four times during the year, with the main items being
considered including Board structure (covering proposed changes to Chair role and Committee composition), review of key matters
including Board and management succession planning, talent management and development and leadership development, undertaking
a Board evaluation during the year and considering engagement of an external service provider for the 2022 Board evaluation.
Meetings and attendance
All Directors are encouraged to attend all Board meetings and meetings of committees of which they are members. Directors’
attendance at meetings during the year (including the AGM) was as follows:
Meetings attended (eligible to attend)
David Kiddie1
Ian Mattioli
Ravi Tara
Michael Wright
Iain McKenzie
Anne Gunther
Edward Knapp
Martin Reason
Joanne Lake2
Notes:
Risk and
Compliance
Committee
Audit Remuneration
Committee
Committee
Nomination
Committee
5(6)
–
–
–
–
5(6)
*6(6)
5(6)
–
–
–
–
–
–
*5(5)
5(5)
5(5)
3(4)
1(1)
–
–
–
–
4(4)
–
*4(4)
3(4)
*4(4)
2(2)
–
–
–
4(4)
–
–
2(2)
Board
*6(6)
4(6)
6(6)
6(6)
5(6)
6(6)
6(6)
6(6)
4(5)
* Denotes Committee Chair.
1
David Kiddie appointed as Independent Non-Executive Chair on 14 March 2022.
2 Joanne Lake stepped down from Board on 8 April 2022.
Other committees
These committees form part of the corporate governance framework but are not sub-committees of the Board. The main committees
comprise the Governance Committee, the Management Engagement Committee, the Investment Committee and the Executive Risk and
Compliance Committee.
Governance Committee
The Board strongly believes that robust governance and strong, responsible, balanced leadership by the Board are critical to creating
long-term shareholder value and business success. The committee’s role is to assist the Board in shaping the strategy, culture and ethical
values of the Group, while supporting the Management Engagement Committee in the day-to-day management of Mattioli Woods and
its subsidiaries.
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Corporate governance report continued
Governance Committee continued
The key responsibilities of the committee are to:
• Take a leadership role in shaping the corporate governance principles, culture and ethical values of the Group in line with
the Group’s strategic priorities;
• Oversee the brand and reputation of the Group, ensuring that reputational risk is consistent with the risk appetite approved
by the Board and the creation of long-term shareholder value;
• Develop strategy and growth initiatives, such as possible acquisitions and new products and services;
• Implement the agreed strategy and support the day-to-day management of the Group by the Management Engagement
Committee;
• Review and discuss the annual business plan and budget prior to its submission to the Board for approval;
• Oversee the Group’s compliance with its statutory and regulatory obligations, including conduct of the firm and TCF; and
• Oversee the Group’s conduct in relation to its corporate and societal obligations, including setting the guidance, direction and
policies for the Group’s TCF, corporate responsibility agenda and related activities and advising the Board and management on
these matters.
The Governance Committee is Chaired by the Chief Executive and comprises functional heads from the appropriate disciplines.
Committee meetings are normally attended by the Group Managing Director, Chief Financial Officer, Chief Operating Officer
and by other senior executives from the Group as requested.
Management Engagement Committee
The Board has delegated its day-to-day operational authority to the Management Engagement Committee, subject to a list of matters
that are reserved for decision by the Governance Committee or the full Board only. The Management Engagement Committee is
primarily responsible for:
• Managing and monitoring all aspects of the Group’s business on a continuing basis;
• Implementing the business strategy and business plans agreed by the Board from time to time;
• Ensuring that day-to-day operations are conducted in accordance with the relevant regulatory and statutory requirements;
• Monitoring the management and performance of the Group‘s business units and operating subsidiaries (including their results
compared to budget, risks and regulatory compliance); and
• Reviewing employee talent management and development programmes, ensuring they consider the benefits of diversity,
ncluding gender, social and ethnic backgrounds, cognitive ability and personal strengths.
The Management Engagement Committee meets at least monthly but more frequently if required. The committee is Chaired by the
Executive Directors on behalf of the Chief Executive and committee meetings may be attended by any number of a broad range of
senior managers from across the Group, depending on the meeting agenda.
Investment Committee
The Board has delegated authority to the Investment Committee to oversee the Group’s investment management approach, developing
the ‘house view’ on economics, investment markets and asset allocation; and considering how the Group should best apply these views.
In particular, the Investment Committee is responsible for developing and implementing the Group’s asset management strategy, for
developing and monitoring all aspects of the Group’s investment business on a continuing basis, receiving reports from the board
of Custodian Capital, the Multi-Asset team (including the Asset Allocation Committee) and from the managers of the Group’s single
strategy funds, including Individual Structured Products. The Committee is also responsible for ensuring that the Group’s day-to-day
investment and asset management operations are conducted in accordance with the relevant regulatory and statutory requirements
through the investment management, investment research and investment operations teams.
The Investment Committee meets at least six times a year but more frequently if required. The Committee is Chaired by the Chief
Investment Officer and comprises senior members of the investment, wealth management, technical and compliance functions.
Executive Risk and Compliance Committee
The Board has delegated authority to the Executive Risk and Compliance Committee to oversee the operation of the Group’s risk and
compliance framework and activity. The Executive Risk and Compliance Committee is responsible for ensuring that risk, compliance and
internal audit are considered, reviewed and actions implemented across all areas of the Group including wealth management advice, asset
management, pension administration and employee benefits. The committee is also responsible for ensuring that risks are fully considered
in context of the Group’s ICARA and the impact on the Group’s capital requirements.
The Operational Risk and Compliance Committee meets at least four times a year but more frequently if required. The committee is Chaired
by the compliance oversight function and comprises senior members of the Group’s management and risk and compliance function.
Mattioli Woods plc Annual Report 2022 S
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Induction, training and performance evaluation
New Directors receive an induction on their appointment covering the activities of the Group, its key business and financial risks, the
terms of reference of the Board and its committees and the latest financial information.
The Chair ensures Directors update their skills, knowledge and familiarity with the Group as required to fulfil their roles on the Board
and its committees. Ongoing training is provided as necessary and includes updates from the Company Secretary and Nominated
Adviser on changes to the AIM Rules, requirements under the Companies Acts and other regulatory matters. All Directors have access
to independent professional advice at the Company’s expense where they judge it necessary to discharge their duties, with requests for
such advice being authorised by the Chair or two other Directors, one of whom is a Non-Executive.
Evaluation of the Board’s performance
During the year ended 31 May 2022, an internal review of the Board’s effectiveness was undertaken and led by the senior independent
Director. This involved one-to-one interviews with Directors and a review of Board and Board committee papers and minutes. The key
points raised in the review were around Board composition and succession planning.
The Board plans to undertake a self-evaluation during the financial year ended 31 May 2023, which will be led and facilitated by a third-
party provider and is intended to be repeated annually thereafter.
Individual appraisal of each Director’s performance is undertaken either by the Chief Executive Officer or Chair each year and involves
meetings with each Director on a one-to-one basis. The Non-Executive Directors, led by the Senior Independent Director, carry out
an appraisal of the performance of the Chair and Chief Executive Officer.
Retirement and re-election
All Directors are subject to election by shareholders after their appointment and to re-election thereafter at intervals of no more than
three years under the Company’s articles of association. However, as a matter of good practice and as recommended under the QCA
Corporate Governance Code, Board policy is for all Directors to stand for re-election at each AGM.
Non-Executive Directors’ appointments are initially for 12 months and continue thereafter until terminated by either party giving
six months’ prior written notice to expire at any time on or after the initial 12-month period. The terms and conditions of appointment
of the Non-Executive Directors are available for inspection at the Company’s registered office during normal business hours and prior
to the AGM.
Communications with shareholders
The Board is committed to maintaining an ongoing dialogue with the Company’s shareholders. The principal methods of communication
with private investors remain the Annual Report and financial statements, the Interim Report, the AGM and the Group’s website
(www.mattioliwoods.com).
It is intended that all Directors will attend each AGM and shareholders will be given the opportunity to ask questions at the AGM on 28
October 2022. In addition, the Chair, Chief Executive Officer, Chief Financial Officer and Group Managing Director welcome dialogue
with individual institutional and retail shareholders to understand their views and feed these back to the Board. General presentations
are also given to analysts and investors covering the annual and interim results as well as additional presentations dependent upon the
circumstances and include for acquisition activity, investment in the Group or for fundraising.
Internal control and risk management
The Board is ultimately responsible for the Group’s systems of internal control and for reviewing their effectiveness. Such systems are
designed to manage rather than eliminate risks and can only provide reasonable not absolute assurance against material misstatement
or loss.
In accordance with the guidance of the Turnbull Committee on internal control, an ongoing process has been established for identifying,
evaluating and managing significant risks faced by the Group. This process has been in place throughout the year under review and up to
the date of approval of the Annual Report and financial statements.
The Board routinely reviews the effectiveness of the systems of internal control and risk management to ensure controls react
to changes in the nature of the Group’s operations.
The Group maintains appropriate insurance cover and reviews the adequacy of the cover regularly, in conjunction with the Group’s
insurance brokers.
There are clearly defined procedures for reviewing and approving transactions, acquisitions, material expenditure and capital
expenditure within the Group.
On behalf of the Board
Ravi Tara
Chief Financial Officer
12 September 2022
Mattioli Woods plc Annual Report 2022F 60
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Directors’ remuneration report
Remuneration policy
Mattioli Woods recognises the importance of its employees to the success of the Group and consequently the remuneration policy is
designed to be market competitive to attract, motivate and retain high-calibre individuals. The main focus of the Group’s remuneration
policy is to align the interests of the Executive Directors with the Group’s strategic priorities and the long-term creation of shareholder value.
The Remuneration Committee reviews the regulatory and legislative framework with the aim of ensuring that the remuneration policy is
in line with best practice, including the FCA codes of practice (“the FCA Codes”) which set out the standards and policies that regulated
firms are required to meet when setting pay and bonus awards for staff. External data is used to validate rather than to benchmark the
total rewards granted and the Remuneration Committee takes into consideration the current economic climate, remuneration policies
of comparable businesses and pay and employment conditions elsewhere in the Group when considering Executive Directors‘ and other
senior managers’ pay.
The remuneration arrangements are designed to:
• Promote value creation;
• Support the business strategy;
• Promote the long-term success of the Group;
• Deliver a competitive level of pay for the Executive Directors and senior management;
• Encourage the retention of staff through deferred variable compensation, where appropriate;
• Ensure greater alignment between the interests of the Executive Directors and the long-term interests of shareholders through
significant long-term equity participation;
• Be fair for both the Director and the Group, with some element of discretion;
• Comply with financial services rules and regulations;
• Discourage excessive risk taking and short-termism;
• Encourage more effective risk management; and
• Support positive behaviours and a strong and appropriate conduct culture.
The Group’s policy is to remunerate Executive Directors and senior management through basic salary and benefits, annual performance-
related discretionary bonuses and participation in long-term incentive plans that promote the creation of sustainable shareholder value.
The total reward is designed to include a balance of fixed and variable pay with an element of deferral attached to a proportion
of the variable pay element.
Fees for the Non-Executive Directors are determined by the Board and are reviewed annually, having regard to fees paid to
Non-Executive Directors in other UK quoted companies, the time commitment and responsibilities of the role. Non-Executive Directors
do not receive bonuses or share entitlements, although they are able to purchase shares in the Group. No Director is permitted to
participate in decisions concerning their own remuneration.
The effective date for annual changes in Directors’ remuneration is 1 September, in line with the Group’s other employees, unless
otherwise agreed by the Remuneration Committee.
Shareholders will be asked to approve the Directors’ remuneration report, including the remuneration policy that applies to the Directors
and employees of the Group, at the Company’s next AGM on 28 October 2022.
Mattioli Woods plc Annual Report 2022 S
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Single total figure of remuneration for each Director (audited)
Directors’ remuneration payable in respect of the years ended 31 May 2022 and 2021 was as follows:
Salary
and fees
Benefits
Bonus
Long-term
incentive
plan12
Pension-
related
benefits
Share
incentive
plan
Total
2022
£000
2021
£000
2022
£000
2021
£000
2022
£000
2021
£000
2022
£000
2021
£000
2022
£000
2021
£000
2022
£000
2021
£000
2022
£000
2021
£000
Executives1
Ian Mattioli2
Ravi Tara2,3
Michael Wright4,6
Iain McKenzie5,6
Nathan Imlach6,7
Sub-total
Non-Executives
David Kiddie8,9
Anne Gunther
Edward Knapp8
Martin Reason8
Joanne Lake10
Carol Duncumb11
Sub-total
Total
Notes:
592
249
268
228
–
372
57
–
5
72
5
2
3
2
–
9
1
–
–
7
653
199
214
183
–
600
190
–
100
–
481
–
23
–
–
433
–
–
–
203
1,337
506
12
17 1,249
890
504
636
75
59
47
48
86
–
17
56
16
17
95
38
315
1,652
239
745
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
12
17 1,249
890
504
636
99
66
28
23
13
34
–
99
–
–
–
–
–
–
–
52
3
–
–
11
66
–
–
–
–
–
–
–
2
2
2
2
–
8
–
–
–
–
–
–
–
8
2 1,761 1,468
253
475
2
524
–
–
105
449
–
295
–
2
6 3,209 2,121
–
–
–
–
–
–
–
75
59
47
48
86
–
17
56
16
17
95
38
315
239
6 3,524 2,360
1. The benefit package of each Executive Director includes the provision of life assurance under a group scheme;
2. The salary packages of Ian Mattioli and Ravi Tara include a car allowance;
3. Ravi Tara appointed as a Director of the Company on 17 February 2021;
4. Michael Wright appointed as a Director of the Company on 8 June 2021;
5. Iain McKenzie appointed as a Director of the Company on 24 May 2021;
6. The benefit packages of Michael Wright, Iain McKenzie and Nathan Imlach include the provision of a company car;
7. Nathan Imlach ceased to be a Director on 19 October 2020;
8. David Kiddie, Edward Knapp and Martin Reason appointed as Non-Executive Directors of the Company on 5 January 2021;
9. David Kiddie appointed as Independent Non-Executive Chairman on 14 March 2022;
10. Joanne Lake ceased to be a Non-Executive Director of the Company on 8 April 2022;
11. Carol Duncumb resigned as a Non-Executive Director of the Company on 19 March 2021; and
12. Total market price of shares under option vesting during the year as at their vesting date, less any option exercise price payable.
Notes to Directors’ remuneration table
Salary
The base salaries of the Executive Directors are reviewed annually having regard to personal performance, divisional or Group
performance, significant changes in responsibilities and competitive market practice in their area of operation.
Fees
The Non-Executive Directors are only paid fees, which are not pensionable. In addition to a basic fee, Non-Executive Directors
also receive additional responsibility fees in recognition of them being a member of or chairing a committee or being the Senior
Independent Director.
Benefits
Benefits for Executive Directors principally relate to the provision of cars, death in service cover and permanent health insurance
or cash allowances taken in lieu of such benefits.
Bonus
Bonus awards to Executive Directors and some other senior employees of the Group for profit-related performance are made from
a pool of the Group’s earnings before interest, taxation, depreciation and amortisation after payment of bonuses payable to all other
staff. Executive Directors’ bonuses in respect of the year ending 31 May 2022 will be payable on a purely discretionary basis as follows:
• A discretionary personal performance award based on the achievement of personal key objectives.
Mattioli Woods plc Annual Report 2022F
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Directors’ remuneration report continued
Notes to Directors’ remuneration table continued
Bonus continued
The maximum award as a proportion of salary and the actual award payable in respect of the year ended 31 May 2022 are summarised
as follows:
Director
Ian Mattioli
Ravi Tara
Michael Wright
Iain McKenzie
Actual
award as a
Maximum
award as a
proportion of proportion of
salary
salary
110%
80%
80%
80%
130%
100%
100%
100%
Linked to
corporate
objectives
Linked to
personal
objectives
0%
0%
0%
0%
100%
100%
100%
100%
The awards for the current year include an element linked to corporate objectives in line with the discretionary bonus paid out to all
staff, and an additional award related to meeting personal objectives. These awards are reviewed and approved by the Remuneration
Committee at the start of each financial year, with the payment of personal awards being made at the committee’s discretion. In
recognition of the markets that the Group operates in, the Remuneration Committee has resolved that more flexible remuneration
arrangements are required to protect the Group’s financial position and to retain talent, which will be reviewed in the next financial year.
Executive Directors’ bonuses in respect of the year ending 31 May 2023 will be payable on a purely discretionary basis, as follows:
Director
Ian Mattioli
Ravi Tara
Michael Wright
Iain McKenzie
Maximum
award as a
proportion of
salary
Linked to
corporate
objectives
200.0%
200.0%
200.0%
200.0%
0%
0%
0%
0%
Linked to
personal
objectives
200.0%
200.0%
200.0%
200.0%
Long-Term Incentive Plan
To assist the Group to attract and retain appropriately qualified staff, the Mattioli Woods 2010 Long-Term Incentive Plan (“the LTIP”)
and the new Mattioli Woods 2021 Long-Term Incentive Plan scheme introduced in the year following approval at the last AGM are to
incentivise and reward certain of its senior employees and Executive Directors. Awards made to the Executive Directors under the
LTIP are set out below.
Pension related benefits
Executive Directors may participate in the pension arrangements of the Group or elect to have pension payments paid into a personal
pension plan or as cash in lieu of pension on the same basis as other employees. Pension payments in respect of Executive Directors are
currently in line with all staff of up to 5% of base salary. Pension payments for the Chief Executive and Executive Directors are currently
5% of base salary (before any temporary reductions).
Share Incentive Plan
The Mattioli Woods plc Share Incentive Plan (“the SIP”) enables employees to buy shares in the Company at an effective discount to the
Stock Exchange price by having an amount deducted from pre-tax salary each month. In addition, the Company can grant participating
employees matching and/or free shares.
The consequent employee benefit is the value of the SIP matching shares made in the year. Employees may contribute up to £150 per
month to buy partnership shares with contributions matched on a one-for-one basis by the Company.
Mattioli Woods 2010 Long-Term Incentive Plan
The current LTIP was approved by shareholders at the Company’s 2010 AGM with the new 2021 LTIP scheme approved at the last AGM
in October 2021. During the year ended 31 May 2022 the Remuneration Committee granted further awards under the LTIP in respect
of the year ended 31 May 2021. The LTIP allows a significant element of deferred variable remuneration to be paid in equity or a cash
equivalent award.
Eligibility
Any employee (including an Executive Director) of the Company or any of its subsidiaries will be eligible to participate in the LTIP
at the discretion of the Remuneration Committee.
Form of award
Awards under the LTIP may be in the form of an option granted to the participant to acquire ordinary shares with a nominal exercise
price of 1p. Alternatively, the Remuneration Committee may at its discretion grant participants a right to receive a cash amount which
relates to the value of a certain number of notional shares.
Mattioli Woods plc Annual Report 2022
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Performance conditions
Options granted under the LTIP are only exercisable subject to the satisfaction of the following performance conditions which will
determine the proportion of the option that will vest at the end of a three-year or five-year performance period:
Compound annual growth in normalised
EBITDA over the performance period
<5%
5%
12%
Percentage of maximum award vesting
Nil
30%
100%
The percentage of maximum award vesting will be calculated pro rata between the minimum and maximum hurdles. If the performance
conditions are not met over the three or five financial years commencing on 1 June before the date of grant, the options lapse. The
options will generally be exercisable after approval of the financial statements for the financial year two years or four years after
the year of grant, or on a change of control (if earlier).
The Remuneration Committee believes that extending the performance period for awards under the LTIP to a five-year period creates
greater alignment between award-holders and shareholders and will encourage a long-term perspective.
Individual and overall limits
The maximum award for any eligible employee under the LTIP for any one year is 100% of salary. The LTIP is subject to an overall limit
on the total number of shares which may be issued within a 10-year period under the LTIP or any other employee share plan operated
by the Group of 10% of the issued ordinary share capital of the Company.
Clawback
Vested and unvested LTIP awards are subject to a formal malus and clawback mechanism.
Grant of equity share options under the LTIP
As at 31 May 2022, the Company had granted options to certain of its senior employees and Executive Directors to acquire (in aggregate)
up to 2.06% (2021: 3.31%) of its share capital. The maximum entitlement of any individual was 0.31% (2021: 0.85%). The options are
exercisable at 1p per share.
Terms of awards
Options may be granted over newly issued shares, treasury shares or shares purchased in the market. Options are not transferable
other than on death. Shares acquired through the LTIP may be delivered to participants by the trustees of the Mattioli Woods 2010
Employee Benefit Trust (“the EBT”), which was established for this purpose. The trustees may either subscribe for new shares from the
Company or purchase shares on the market. The EBT may never hold more than 5% of the ordinary share capital of the Company at any
time. At 31 May 2022 the EBT held 76,578 shares (2021: 76,578) and the Company held no shares in treasury (2021: nil) having suspended
monthly purchases in response to the COVID-19 pandemic in April 2020.
Mattioli Woods plc Annual Report 2022F
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Directors’ remuneration report continued
Directors’ interest in share options (audited)
Outstanding share options granted to Executive Directors under the 2010 and 2021 LTIPs are as follows:
Director
Ian Mattioli
Ravi Tara
Michael Wright1
Iain McKenzie
Total
Granted
during
the year
No.
Exercised
during
the year
No.
Forfeited
during
the year
No.
Exercise
price
£
0.01
0.01
0.01
0.01
31 May
2021
No.
240,016
7,500
38,000
17,500
120,000
40,000
45,000
30,000
(200,016)
–
(3,000)
–
303,016
235,000
(203,016)
31 May
2022
No.
160,000
47,500
80,000
47,500
335,000
–
–
–
–
–
Notes:
1 Michael Wright appointed as a Director of the Company on 8 June 2021.
Note 20 to the financial statements contains a detailed schedule of all options granted to Directors and employees as at 31 May 2022.
All of the options were granted for nil consideration.
The Remuneration Committee expects to be able to grant additional awards under the LTIP following the announcement of the Group’s
trading update in respect of the year ended 31 May 2022 and subject to compliance with Market Abuse Regulation requirements.
Service contracts
It is the Group’s policy for all Executive Directors to have contracts of employment that contain a termination notice period not
exceeding 12 months. Ian Mattioli’s appointment continues until terminated by either party on giving not less than 12 months’ notice
to the other party. The other Executive Directors’ appointments continue until termination by either party on giving not less than six
months’ notice to the other party.
David Kiddie, Anne Gunther, Edward Knapp and Martin Reason do not have service contracts. A letter of appointment provides for an
initial period of 12 months and continues until terminated by either party giving six months’ prior written notice to expire at any time
on or after the initial 12-month period.
Directors’ shareholdings (audited)
As at 12 September 2022, the interest of the Directors in the issued shares of the Company, as shown in its register maintained under
section 809 (2) and (3) of the Companies Act 2006, were:
Director
Ian Mattioli
Ravi Tara
Michael Wright
Iain McKenzie
David Kiddie
Anne Gunther
Edward Knapp
Martin Reason
Notes:
20221
No.
%
2021
No.
3,010,979
11,225
21,208
4,989
3,030
11,576
–
15,152
5.90 3,402,925
10,690
0.02
18,994
0.04
4,459
0.01
3,030
0.01
11,576
0.02
–
–
15,152
0.03
%
6.73
0.02
0.05
0.01
0.01
0.02
–
0.03
1 Percentage shareholdings are based upon the total issued share capital of 51,084,759.
Directors’ shareholdings include any shareholdings of trusts or family members deemed to be connected persons.
The mid-market closing price of the Company’s ordinary shares at 31 May 2022 was 710.0p and the range during the financial year was
700.0p to 892.5p.
None of the Directors had an interest in any contract of significance in relation to the business of the Company or its subsidiaries at any
time during the financial year, other than those disclosed in Note 29 to the financial statements.
There was no change in the Directors’ shareholdings or interests in options between 1 June 2022 and 12 September 2022.
Mattioli Woods plc Annual Report 2022
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Total shareholder return performance graph
The graph below illustrates the total shareholder return (“TSR”) for the five years ended 31 May 2022 in terms of the change in value of
an initial investment of £100 invested on 1 June 2017 in a holding of the Company’s shares against the corresponding total shareholder
returns in hypothetical holdings of shares in the FTSE AIM All Share Index.
Mattioli Woods TSRF
TSE AIM All share TSR
£160
£140
£120
£100
£80
£60
£40
£20
7
1
0
2
y
a
M
7
1
0
2
g
u
A
7
1
0
2
v
o
N
8
1
0
2
b
e
F
8
1
0
2
y
a
M
8
1
0
2
g
u
A
8
1
0
2
v
o
N
9
1
0
2
b
e
F
9
1
0
2
y
a
M
9
1
0
2
g
u
A
9
1
0
2
v
o
N
0
2
0
2
b
e
F
0
2
0
2
y
a
M
0
2
0
2
g
u
A
0
2
0
2
v
o
N
1
2
0
2
b
e
F
1
2
0
2
y
a
M
1
2
0
2
g
u
A
1
2
0
2
v
o
N
2
2
0
2
b
e
F
2
2
0
2
y
a
M
The Company is a member of the FTSE AIM All Share Index and considers this to be the most appropriate broad equity market index for
the purpose of measuring the Company’s relative performance.
On behalf of the Board
Martin Reason
Chair of the Remuneration Committee
12 September 2022
Mattioli Woods plc Annual Report 2022F
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Directors’ report
Report and financial statements
The Directors have pleasure in presenting their report together with the audited financial statements for the year ended 31 May 2022.
For the purposes of this report, the expression ‘Company’ means Mattioli Woods plc and the expression ‘Group’ means the Company
and its subsidiaries.
Business review
The Group’s principal activities continue to be the provision of:
• Advice for wealth management, pension consulting and employee benefits for corporate clients;
• Administration of advised and third-party clients on an execution-only basis; and
• Investments, which covers the Group’s DPM service, CREIT, Private Investor Club, managed funds, individual structured plans,
in addition to funds managed by Maven and the Group’s associate Amati.
The Strategic Report includes further information about the Group’s business model on page 4, financial performance during the year
and indications of likely future developments on pages 17 to 19.
The Directors believe they have adequately discharged their responsibilities under section 414(c) of the Companies Act 2006 to provide
a balanced and comprehensive review of the development and performance of the business.
Statement by the Directors under section 172 Companies Act 2006
The Directors consider that they have acted in the way they consider, in good faith, would be most likely to promote the success of the
Company for the benefit of its members as a whole, and in doing so having regard to the stakeholders and matters set out in section
172(1)(a-f) of the Act in the decisions taken during the year ended 31 May 2022. This is demonstrated in the Section 172 statement
included in the Strategic Report on pages 33 to 37.
Results and dividends
The results are summarised in the Strategic Report on page 2. The final dividend in respect of the year ended 31 May 2021 of 13.5p
per share was paid in November 2021. An interim dividend in respect of the year ended 31 May 2022 of 8.3p per share was paid to
shareholders in March 2022. In light of the current trading conditions and need to protect the Group’s financial position and balance
the interests of all stakeholders, the Board is pleased to recommend a final dividend of 17.8p per share (2021: 13.5p). This makes a
proposed total dividend for the year of 26.1p (2021: 21.0p), a year-on-year increase of 24.3% (2021: 5.0%). This has not been included
within the Group financial statements as no obligation existed at 31 May 2022. If approved, the final dividend will be paid on 3 November
2022, to ordinary shareholders whose names are on the register at the close of business on 23 September 2022, having an ex-dividend
date of 22 September 2022.
Share capital
Mattioli Woods plc is a public limited company incorporated in England and Wales and its shares are quoted on the AIM market of
London Stock Exchange plc. The Company’s authorised and issued share capital during the year and as at 31 May 2022 are shown
in Note 23. The ordinary shares rank pari passu in all respects. As agreed at the Annual General Meeting of the shareholders, the
ordinary shares have pre-emption rights in respect of any future issues of ordinary shares to the extent conferred by section 561
of the Companies Act 2006.
There are no restrictions on the transfer of ordinary shares in the Company, other than:
• Certain restrictions that may be imposed from time to time by laws and regulations and pursuant to the Listing Rules of the FCA,
whereby certain Directors, officers and employees of the Group require the approval of the Group to deal in ordinary shares of the
Company;
• The former shareholder of Montagu who has entered into a lock-in deed with Mattioli Woods and its nominated adviser and broker,
Canaccord Genuity Limited, restricting sales of that part of the consideration comprising 40,161 ordinary shares in Mattioli Woods
during the two years ending 2 February 2023;
• The former shareholders of Pole Arnold Financial Management who have entered into lock-in deeds with Mattioli Woods and its
nominated adviser and broker, Canaccord Genuity Limited, restricting sales of that part of the consideration comprising 72,940
ordinary shares in Mattioli Woods during the two years ending 12 April 2023;
• The former shareholders of Caledonia Asset Management who have entered into lock-in deeds with Mattioli Woods and its
nominated adviser and broker, Canaccord Genuity Limited, restricting sales of that part of the consideration comprising 12,724
ordinary shares in Mattioli Woods during the two years ending 16 April 2023;
• The former partners of Maven Capital Partners who have entered into lock-in deeds with Mattioli Woods and its nominated adviser
and broker, Canaccord Genuity Limited, restricting sales of that part of the consideration comprising 4,545,455 ordinary shares in
Mattioli Woods during the four years ending 30 June 2025; and
• Some of the former shareholders of Ludlow Wealth Management who have entered into lock-in deeds with Mattioli Woods and its
nominated adviser and broker, Canaccord Genuity Limited, restricting sales of that part of the consideration comprising 780,250
ordinary shares in Mattioli Woods during the two years ending 3 September 2023.
The Group is not aware of any other agreements between holders of securities that may result in restrictions on the transfer
of ordinary shares.
Mattioli Woods plc Annual Report 2022 S
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Employee share trust
The Mattioli Woods 2010 Employee Benefit Trust (“the EBT”) was established to deliver shares for the benefit of employees and former
employees of the Group who have been granted an award under one of the Group’s employee share schemes. The trustee has agreed
to satisfy awards under the Group’s employee share schemes. As part of these arrangements the Group funds the EBT, from time to
time, to enable the trustee to acquire shares to satisfy these awards, details of which are set out in Note 23 of the financial statements.
The trustee has waived its right to dividends on all shares held within the trust.
During the year ended 31 May 2022, the EBT purchased no shares in the Company (2021: nil) at a cost of £nil (2021: £nil).
At 12 September 2022, the Company had been notified of the following interests representing 3% or more of its issued share capital:
Shareholder
Octopus Investments
Liontrust Asset Management
Investec Wealth & Investment
Ian Mattioli
William Nixon
Abrdn plc
Royal London Mutual Assurance Society
Gresham House
Canaccord Genuity Group
Chelverton Asset Management
BlackRock Investment Management
Notes:
Number of
ordinary shares
Percentage
holding1
5,094,431
3,874,150
3,176,709
3,010,979
2,557,306
2,325,197
2,302,375
2,224,035
2,060,974
1,850,000
1,575,113
9.97
7.59
6.22
5.90
5.01
4.55
4.51
4.35
4.04
3.62
3.08
1 Percentage shareholdings are based upon the total issued share capital of 51,084,759.
In addition to the above shareholdings, 804,004 (2021: 701,259) ordinary 1p shares representing 1.6% (2021: 1.4%) of the issued share
capital are held by employees via the Mattioli Woods plc Share Incentive Plan (“the SIP”). The Group intends to actively encourage wider
share ownership by its employees through the SIP and other share-based incentive schemes.
Directors
A list of current serving Directors and their biographies is given on pages 50 and 51. The Company’s articles of association require that
any Director who held office at the time of the two preceding AGMs and who did not retire at either of them shall retire from office at
the next AGM and may offer themselves for re-election. As a matter of good governance however, each of the Directors will stand for
re-election at this AGM.
The Board has a process for the evaluation of its own performance and that of the individual Directors and, following the evaluation of
the performance of the Directors during the year ended 31 May 2022, it was confirmed that each Director continues to be an effective
member of the Board and demonstrates commitment to the role.
Directors’ interests
Directors’ emoluments, beneficial interests in the shares of the Company and their options to acquire shares are disclosed in the Directors’
remuneration report. During the period covered by this report, no Director had a material interest in a contract to which the Company or
any of its subsidiaries was a party (other than their own service contract), requiring disclosure under the Companies Act 2006.
Conflicts of interest
There are procedures in place to deal with any Directors’ conflicts of interest arising under section 175 of the Companies Act 2006 and
such procedures have operated effectively since the Company adopted new articles of association on 22 October 2009.
Directors’ indemnity
All Directors and officers of the Company have the benefit of the indemnity provision contained in the Company’s articles of association.
The provision, which is a qualifying third-party indemnity provision, was in force throughout the last three financial years and is currently
still in force. The Group also purchased and maintained throughout the financial period Directors’ and Officers’ liability insurance
in respect of itself and its Directors and officers, although no cover exists in the event Directors or officers are found to have acted
fraudulently or dishonestly.
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Directors’ report continued
Employees
The Group continues to involve its staff in the future development of the business. Information is provided to employees through
briefing sessions, webinars, the Group’s website and its intranet, ‘MWeb’, which is continually updated. How the Group has engaged with
employees and had due regard to their interests in considering the principal decisions taken during the year are demonstrated in the
Section 172 statement included in the Strategic Report on pages 33 and 34.
The Group operates ‘MyWay’, an online flexible benefits platform. Employees can change elements of their benefits choice annually or if
they have any lifestyle events. MyWay offers a variety of benefits covering health and wellbeing, finance and lifestyle choices, in addition
to a core benefits package, and employees are able to purchase these benefits at group rates. MyWay shows employees the value of
their salary and all other benefits as part of a total reward statement. The platform allows individuals to select options to meet their
personal needs and since its launch we have seen an increasing take up of flexible benefits each year.
The Group operates a Group Personal Pension plan available to all employees and contributes to the pension schemes of Directors and
employees. Following the introduction of auto enrolment every employer must automatically enrol eligible jobholders into a workplace
pension scheme. Employers are then required to make contributions to pension schemes, adding to the savings made by employees.
Eligible employees may choose to opt out after they have been automatically enrolled. Employers cannot avoid their obligation to
automatically enrol eligible employees into a qualifying scheme.
The Group’s pension scheme qualifies as an auto enrolment scheme, with the Group applying the following contribution rates:
Date
6 April 2020 onwards
Employer
contribution
Minimum
employee
contribution
5%
5%
The Group operates a Share Incentive Plan and Long-Term Incentive Plan, details of which are given in the Directors’ remuneration
report and the financial statements.
The Group is committed to the principle of equal opportunity in employment, regardless of a person’s race, colour, nationality, gender,
age, marital status, sexual orientation, religion or disability. Employment policies are fair, equitable and consistent with the skills and
abilities of the employees and the needs of the business.
Applications for employment by disabled persons are always fully considered. In the event of members of staff becoming disabled, every
effort is made to ensure that their employment with the Group continues by implementing reasonable adjustments to ensure that they
can fulfil their day-to-day duties, and that appropriate training is arranged. Group policy is that the training, career development and
promotion of disabled persons should, as far as possible, be identical to that of other employees.
Following the relaxation of COVID-19 restrictions, we have reopened our graduate training programme and apprenticeships schemes,
working in partnership with schools, colleges and universities, as well as the YMCA. We will be opening up our own work-based training
to develop new and existing staff across a range of business areas as the office is now fully open after the pandemic, fulfilling the
Group’s commitment to creating opportunities that offer a clear progression path both in the short and long term. Recruiting remains
our focus as we continue to grow. Hiring into new roles during the pandemic was successful and continuation of recruitment continues,
albeit with the pressure of the current market.
We recognise that the pandemic is likely to have a lasting impact on the way we work and we have already been through a review of our
current roles, training and engagement, allowing us to introduce new roles where training can be provided.
We operate an eLearning platform in conjunction with the Chartered Insurance Institute’s Financial Assess for the continued professional
development of our staff. We are committed to continual process improvement and intend to seek further business improvements
across our locations.
Research and development
In response to the need for an increasingly sophisticated software solution to manage the broader range of products and services
offered by Mattioli Woods, the Group has continued to invest over a number of years to develop its technology infrastructure, extending
the development of its bespoke pension administration platform to include employee benefits, with the aim of enhancing the services
offered to clients and realising operational efficiencies across the Group as a whole. The costs of this development are capitalised where
they are recognised as having an economic value that will extend into the future and they meet the capitalisation criteria of IAS 38.
Related party transactions
Details of related party transactions are given in Note 29.
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Environmental
The Board believes good environmental practices, such as reducing the volume of printing, recycling of paper waste and committing to
purchasing hybrid, fuel-efficient motor vehicles, will support its strategy by enhancing the reputation of the Group. Due to the Group’s
activities, Mattioli Woods impacts the local and global environment, but due to the nature of its business generally, the Group does not
have a significant environmental impact. Environmental performance and strategy are summarised on pages 38 and 39 of the Strategic
Report.
Annual General Meeting
The AGM of the Company will be held on 28 October 2022. The notice of the meeting together with details of the resolutions proposed
and explanatory notes will be available on the Group’s website.
Principal risks and uncertainties
The Directors’ view of the principal risks and uncertainties facing the business is summarised on pages 23 to 32 of the Chief Executive’s
review.
Financial risk management
The Company and certain of its subsidiaries are supervised in the UK by the FCA. The Group must comply with the regulatory capital
requirements set by the FCA and manages its regulatory capital through continuous review of the capital requirements of the Company
and its regulated subsidiaries, which are monitored by the Group’s management and reported monthly to the Board.
The Group’s financial risk management is based upon sound economic objectives and good corporate practice. The Board has overall
responsibility for risk management and internal control. Our process for identifying and managing risks is set out in more detail on pages
52 and 53 of the review of corporate governance. The key risks and mitigating factors are set out on pages 24 to 32.
The Group seeks to manage financial risk, to ensure sufficient liquidity is available to meet the identifiable needs of the Group and to
invest cash assets safely and profitably. If required, short-term flexibility is achieved through the use of bank overdraft facilities. The
Group does not undertake any trading activity in financial instruments. All activities are transacted in Sterling. The Group does not
engage in any hedging activities.
The Group reviews the credit quality of customers and limits credit exposures accordingly. All trade receivables are subject to credit risk
exposure. However, there is no specific concentration of credit risk as the amounts recognised represent a large number of receivables
from various customers.
Loans may be advanced to investment syndicates to secure new investment opportunities. In the event that a syndicate fails to raise
sufficient funds to complete the investment, the Group may either take up ownership of part of the investment or lose some, or all, of
the loan. However, to mitigate this risk, loans are only approved by the Board under strict criteria, which include confirmation of client
demand for the investment.
Corporate governance
A full review of corporate governance appears on pages 52 to 59.
Auditor
A resolution to approve the re-appointment of Moore Kingston Smith LLP will be put to shareholders at the Company’s AGM on
28 October 2022.
Directors’ statement as to disclosure of information to the auditor
The Directors who were members of the Board at the time of approving the Directors’ report are listed on pages 50 and 51. Having made
enquiries of fellow Directors and of the Company’s auditor, each of these Directors confirms that:
• To the best of each Director’s knowledge and belief, there is no relevant audit information of which the Company’s auditor is
unaware; and
• Each Director has taken all the steps they might reasonably be expected to have taken to make themselves aware of any relevant
audit information and to establish that the auditor is aware of that information.
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Directors’ report continued
Going concern
The Group’s business activities, performance and position, together with the risks it faces and the factors likely to affect its future
development, are set out in the Strategic Report. The Board has assessed the Group’s viability over a three-year period from 1 June 2022
through to 31 May 2025. This period is aligned with the Group’s annual budgeting process, where the Board reviews and challenges the
Group’s budget in advance of each new financial year.
The Board has also considered the general business environment and the potential threats to the Group’s business model arising from
regulatory, demographic, political and technological changes. The ongoing economic and market uncertainty continues to affect
financial markets. The Board has carried out a robust assessment of the principal risks facing the Group including those associated with
a general economic downturn, including financial market volatility, deteriorating credit, liquidity concerns, Government intervention,
increasing unemployment, political change, redundancies and other restructuring activities that would threaten the sustainability of its
business model, future performance, solvency or liquidity. This assessment by the Board extends to run a series of stress tests against the
Group’s three-year plan, including a reverse stress scenario in which a variety of external and internal events impact the three-year plan
and so enable the Directors to assess management’s ability to take management actions to mitigate the impact on the Group.
In assessing the future viability of the overall business, the Board also considers the current and future strategy, the results of the latest
ICARA, the risk management controls and procedures in place.
As an example for this year, a Group stress test under the market scenario is based on the impact of a reduction in market value of
investment assets of 20%. Subsequent management actions are considered to ensure the Group still maintains sufficient capital and
liquidity resources.
The Directors believe the Group is well placed to manage its business risks successfully as demonstrated by the stress tests. The Group’s
forecasts and projections show that the Group should continue to be cash generative, maintain a surplus on its regulatory capital
requirements and be able to operate within the level of its current financing arrangements. Accordingly, the Directors continue to adopt
the going concern basis for the preparation of the financial statements. The Directors have considered the Group’s prospects for a
period in excess of 12 months from the date on which the financial statements are approved.
Events after the balance sheet date
There were no significant events occurring after the end of the reporting period.
Approved on behalf of the Board
Ravi Tara
Chief Financial Officer
12 September 2022
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The Directors are responsible for preparing the Directors’ report, Strategic Report and the financial statements in accordance with
applicable law and regulations.
UK company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required
to prepare the Group financial statements in accordance with International Accounting Standards in conformity with the requirements
of the Companies Act 2006. The financial statements also comply with UK-adopted International Accounting Standards.
The financial statements are required by law and UK-adopted International Accounting Standards to present fairly the financial position
of the Group and Company and the financial performance of the Group. The Companies Act 2006 provides in relation to such financial
statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their
achieving a fair presentation.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing each of the
Group and Company financial statements, the Directors are required to:
• Select suitable accounting policies and then apply them consistently;
• Make judgements and estimates that are reasonable and prudent;
• State whether they have been prepared in accordance with UK-adopted International Accounting Standards; and
• Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group
and the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable
them to ensure the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of
the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Mattioli Woods plc
website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Mattioli Woods plc Annual Report 2022F 72
Independent auditor’s report to the members of Mattioli Woods plc
Opinion
We have audited the financial statements of Mattioli Woods plc (the ‘parent company’ and its subsidiaries (the ‘group’) for the year ended
31 May 2022 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of
Financial Position, the Consolidated and Company Statements of Changes in Equity, the Consolidated and Company Statements of Cash
Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been
applied in their preparation is applicable law and UK-adopted International Accounting Standards, and, as regards the parent company
financial statements, as applied in accordance with the provisions of the Companies Act 2006.
In our opinion:
• the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 May 2022
and of the group’s profit for the year then ended;
• the group financial statements have been properly prepared in accordance with the UK-adopted International Accounting Standards;
• the parent company financial statements have been properly prepared in accordance with UK-adopted International Accounting
Standards and as applied in accordance with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
An overview of the scope of our audit
Our group audit approach was a risk-based approach based on obtaining an understanding of the group and its environment, including
the group’s system of internal control, and assessing the risks of material misstatement in the financial statements. We conducted
individual statutory audits on the significant components included in the consolidation, which were audited to their own individual
materiality by the group audit team.
For the significant components within our audit scope we evaluated the controls in place by performing walkthroughs over the financial
reporting systems identified as part of our risk assessment. We also reviewed the accounts production process and addressed critical
accounting matters. We then undertook substantive testing on significant classes of transactions and material account balances.
Where components which were not significant were not subject to statutory audit we performed sufficient substantive analytical review
and other procedures as considered necessary to enable us to express our opinion on the group financial statements.
We also addressed the risk of management override of internal controls across all entities within the scope of our audit, including
assessing whether there was evidence of bias by the directors that may have represented a risk of material misstatement.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements
of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified,
including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the
efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate opinion on these matters.
The key audit matters were:
• Revenue recognition and valuation of accrued Income
• Carrying value of intangible fixed assets
• Disclosure of and accounting for acquisitions
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Revenue recognition and valuation of accrued income
Description
Revenue is a significant item in the consolidated statement of
comprehensive income and impacts a number of management’s
key judgements, performance indicators and key strategic
indicators.
The total revenue reported in the group financial statements is
£108.8m (2021: £62.6m) which is recognised both over time and
at a point in time across five operating segments.
Management uses average recovery rates to calculate the accrued
income balance at the year end, which is a significant estimate.
The rate used in 2022 is 71.9% (2021: 67.8%)
There is a risk of incorrect revenue recognition due to fraud or
error, arising from:
• recognition of revenue in the incorrect period;
• revenue not being recognised in accordance with the
requirements of IFRS 15 ‘Revenue from Contracts with
Customers’; and
• manipulation of revenues around the year-end through
management override of controls.
We therefore identified revenue recognition as a key audit matter.
Carrying value of intangible fixed assets
Description
The directors are required to make an assessment to determine
whether there are indicators of impairment relating to the group’s
intangible assets and goodwill at the reporting date. Goodwill
arising on business combinations is required to be tested for
impairment at each reporting date.
At the reporting date the group had intangible assets of £115.8m
(2021: £45.6m) and goodwill of £83.5m (2021: £17.9m).
Management have prepared an impairment model which covers
all of the group’s operating segments, as each operating segment
is treated as a cash generating unit (“CGU”) for the purposes of
the impairment assessment and has a portion of goodwill and
intangible assets allocated to it. There is significant headroom
in all CGUs using the forecasted revenues and cost allocation as
estimated by management.
Based on the judgemental nature of an impairment review, we
identified valuation of intangible assets and goodwill as a key audit
matter.
How our scope addressed this matter
Our audit work included, but was not restricted to:
• Evaluating the group’s accounting policy in respect of revenue
recognition to ensure it was in compliance with IFRS 15 and
testing of certain key controls identified in relation to revenue.
• Performing substantive testing on a sample of individual revenue
transactions throughout the year across all significant revenue
streams to evaluate whether revenue is recognised in accordance
with the accounting policy set out in note 2.4.
• Reviewing material credit notes, invoices and receipts post year
end.
• Performing sales cut off tests by analysing the records of time
spent on client matters at the balance sheet date to ensure
revenue had been recognised in the correct period, and by
analysing amounts received for the services not yet rendered, thus
resulting in the revenue being deferred.
• Understanding of the relevant controls over the recording of time
costs and the setting of the recovery rate for accrued revenue.
• Examining the historical recovery rates to assess whether twelve
months is an appropriate period of data to set the current
recovery rate and to identify evidence of patterns or outliers that
might indicate it is not.
• Analysing the movement in recoverability rates post year end
for evidence of deterioration in the same and performing a
retrospective review of management estimates.
Key observations
From our audit testing, we did not identify any material misstatements
in respect of revenue recognition.
How our scope addressed this matter
Our audit work included, but was not restricted to:
• Obtaining management’s analysis of their assessment of whether
there were any indicators of impairment.
• Critically assessing the impairment workings prepared by the
client in relation to intangible assets and goodwill to ensure that
no impairment was required, including recalculating the weighted
average cost of capital (WACC) used as a discounting rate.
• Comparing carrying values to other indicators such as market
capitalisation and industry multiples.
• Performing sensitivity analysis on and critically assessing key
assumptions used in the impairment workings, and assessing
the accuracy of the forecasts used based on historical trading
performance for each segment.
• Evaluating the accounting policy and detailed disclosures in
the notes to the financial statements to determine whether
information provided in the financial statements is compliant
with the requirements of IAS 36 and consistent with the results
of the impairment review.
• Reviewing of the amortisation accounting policy for intangible
fixed assets to ensure it was reasonable.
Key observations
Based on our audit work, we concluded that intangible assets and
goodwill are not materially misstated at the reporting date and that
management’s assessment that no impairment was required was
appropriate.
Mattioli Woods plc Annual Report 2022F 74
Independent auditor’s report to the members of Mattioli Woods plc continued
Disclosure and accounting for acquisitions
Description
The group completed 3 acquisitions (2021: 5) in the year, as further
described in note 3 to these accounts.
IFRS 3 Business Combinations requires that the acquired assets
and liabilities of subsidiaries should be recognised initially at fair
value and this may include the recognition of certain intangible
assets, such as for the value of the existing customer portfolios,
which were not previously recognised in the acquiree’s financial
statements. Management has carried out a purchase price
allocation (‘PPA’) exercise to determine the fair value of the assets
acquired and the liabilities assumed, including intangible assets,
using both external and internal experts.
The total acquisition costs include contingent deferred
consideration, the value of which is subjective and is dependent on
a number of factors as detailed in the relevant share and purchase
agreements. This contingent consideration is then subject to fair
value adjustment using a discount rate, which is also subjective and
can cause a material difference to the allocation of the fair value of
assets acquired.
Additionally, where consideration payments are contingent on the
future employment of the seller subsequent to the acquisition,
these amounts are recognised as a post-acquisition remuneration
cost over the relevant period.
Given the subjective nature of the fair value allocation and
recognition of contingent payments, we identified acquisition
accounting and disclosure as a key audit matter.
How our scope addressed this matter
Our audit work included, but was not restricted to:
• Reviewing the methodology applied by the external experts
on preparing PPA on Maven and Ludlow, including review of
the forecasts and discounting rate.
• Assessing the level of reliance placed by management on the
external experts’ workings.
• Agreeing the balances to underlying workings and assessing
the accounting treatment against the requirements of IFRS 3
Business Combinations.
• Reviewing the model used for mathematical accuracy and
consistency.
• Challenging management’s paper on the purchase price allocation
and critically assessing the assumptions made.
• Assessing all share purchase agreements in order to identify
business combinations with conditions for the contingent
consideration, the value of contingent consideration that
should be recognised and whether this should be recognised
as part of the acquisition cost or as a post acquisition
remuneration expense.
• Assessing the disclosures made in Note 3 to the accounts
and agreeing them to the underlying data.
Key observations
Based on our audit work, we concluded that the accounting for
acquisitions is in line with the requirements of IFRS 3 and that the
relevant disclosures are appropriate.
Our application of materiality
The scope and focus of our audit was influenced by our assessment and application of materiality. We define materiality as the magnitude
of misstatement that could reasonably be expected to influence the readers and the economic decisions of the users of the financial
statements. We use materiality to determine the scope of our audit and the nature, timing and extent of our audit procedures and to
evaluate the effect of misstatements, both individually and on the financial statements as a whole.
Due to the nature of the group we considered revenue to be the main focus for the readers of the financial statements, accordingly this
consideration influenced our judgement of materiality. Based on our professional judgement, we determined materiality for the group
to be £1,089,000 and for the parent company to be £602,000 based on one percent of revenue generated by the group and parent
company respectively during the period.
On the basis of our risk assessment, together with our assessment of the overall control environment, our judgement was that
performance materiality (i.e. our tolerance for misstatement in an individual account or balance) for the Group and parent company was
50% of materiality, namely £545,000 and £301,000 respectively.
We agreed to report to the Audit Committee all audit differences in excess of £54,000 for the Group and £30,000 for the parent company,
as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also reported to the Audit
Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation
of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group and parent company’s abilities to
continue to adopt the going concern basis of accounting included:
• Obtaining and critically assessing the going concern assessment prepared by management covering the twelve months from the date
of the audit report,
• Performing sensitivity analysis on the forecasts to ensure there is sufficient cash flow headroom for the group to continue as a going concern,
• Reviewing the trading performance post year end and comparing it to the forecasts to assess their accuracy, and
• Assessing the going concern disclosures made in the financial statements.
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Conclusions relating to going concern continued
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the group and parent company’s ability to continue as a going concern for a period of at
least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this
report.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s
report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any
form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If
we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material
misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the Companies
Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for the financial year for which the financial statements
are prepared is consistent with the parent company financial statements; and
• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the group and the parent company and their environment obtained in the course
of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if,
in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 71, the directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine
is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities is available on the FRC’s website at: https://www.frc.org.uk/auditors/audit-assurance/auditor-
s-responsibilities-for-the-audit-of-the-fi/description-of-the-auditor%E2%80%99s-responsibilities-for
This description forms part of our auditor’s report.
Mattioli Woods plc Annual Report 2022F 76
Independent auditor’s report to the members of Mattioli Woods plc continued
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud, is detailed below.
The objectives of our audit in respect of fraud are: to identify and assess the risks of material misstatement of the financial statements
due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through
designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or
suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both
management and those charged with governance of the company.
Our approach was as follows:
• We obtained an understanding of the legal and regulatory requirements applicable to the company and considered that the most
significant are the Companies Act 2006, UK-adopted International Accounting Standards, the rules of the Alternative Investment
Market, the rules of the Financial Conduct Authority (where applicable) and UK taxation legislation.
• We obtained an understanding of how the company complies with these requirements by discussions with management and those
charged with governance.
• We assessed the risk of material misstatement of the financial statements including the risk of material misstatement due to fraud
and how it might occur, by holding discussions with management and those charged with governance.
• We inquired of management and those charged with governance as to any known instances of non-compliance or suspected non-
compliance with laws and regulations, and reviewed minutes of the meetings of the Board and the various Committees.
• Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with
laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional
corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-
compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements.
Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error,
as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken for no purpose other than to draw to the attention of the company’s members those matters which
we are required to include in an auditor’s report addressed to them. To the fullest extent permitted by law, we do not accept or assume
responsibility to any party other than the company and company’s members as a body, for our work, for this report, or for the opinions
we have formed.
Matthew Meadows (Senior statutory auditor)
For and on behalf of Moore Kingston Smith LLP
Statutory Auditor
London, United Kingdom
12 September 2022
Mattioli Woods plc Annual Report 2022F Consolidated statement of comprehensive income for the year ended 31 May 2022
Revenue
Employee benefits expense
Other administrative expenses
Share-based payments
Amortisation and impairment
Depreciation
Impairment loss on financial assets
Profit on disposal of fixed asset investments
Profit/(loss) on disposal of property, plant and equipment
Gain on bargain purchase
Deferred consideration presented as remuneration
Operating profit before financing
Finance revenue
Finance costs
Net finance costs
Share of profit from associate, net of tax
Profit before tax
Income tax expense
Profit for the year
Items that will not be reclassified to profit or loss
Other comprehensive (loss)/income for the year, net of tax
Total comprehensive income for the year, net of tax
Attributable to:
Equity holders of the parent
Earnings per ordinary share:
Basic (pence)
Diluted (pence)
Proposed total dividend per share (pence)
S
G
77
Note
2022
£000
2021
£000
4
108,226
62,615
11
20
17
15,16
21
26,28
10
8
9
18
12
18
(59,571)
(19,803)
(1,729)
(7,546)
(2,762)
(258)
406
3
–
(9,664)
7,302
79
(1,006)
(927)
1,614
7,989
(3,870)
4,119
(19)
4,100
(34,141)
(13,332)
(1,475)
(3,078)
(2,772)
(25)
–
(46)
288
(3,803)
4,231
34
(258)
(224)
1,141
5,148
(3,757)
1,391
28
1,419
4,100
1,419
13
13
14
8.3
8.3
26.1
5.1
5.1
21.0
The operating profit and earnings per ordinary share for each period arise from the Group’s continuing and total operations.
Mattioli Woods plc Annual Report 2022F
78
Consolidated and Company statements of financial position as at 31 May 2022
Note
Group
£000
Company
£000
Group
£000
2022
Assets
Property, plant and equipment
Right of use assets
Intangible assets
Deferred tax asset
Investments in subsidiaries
Investment in associate
Other investments
Total non-current assets
Trade and other receivables
Income tax receivable
Finance lease receivable
Investments
Cash and short-term deposits
Total current assets
Total assets
Equity
Issued capital
Share premium
Merger reserve
Equity – share-based payments
Capital redemption reserve
Own shares
Retained earnings
Total equity attributable to equity holders of the parent
Non-current liabilities
Trade and other payables
Lease liability
Deferred tax liability
Provisions
Total non-current liabilities
Current liabilities
Trade and other payables
Income tax payable
Lease liability
Provisions
Total current liabilities
Total liabilities
Total equities and liabilities
15
16
17
12
18
18
18
21
12
18
22
23
23
23
23
23
23
23
25
27
12
26
25
12
27
26
2021
Company
£000
2,472
1,823
60,555
932
39,805
4,295
500
14,126
3,322
199,325
776
–
4,165
5,509
2,453
1,066
58,019
751
137,508
4,165
1,526
14,340
2,180
60,468
951
–
4,295
500
227,223
205,488
82,734
110,382
28,446
–
354
253
53,912
82,965
50,883
146
354
–
25,864
77,247
19,197
30
290
26
21,888
41,431
28,247
1,307
290
26
10,909
40,779
310,188
282,735
124,165
151,161
510
143,373
57,225
2,804
2,000
(597)
24,784
510
143,373
57,225
2,804
2,000
–
33,007
283
33,834
17,458
3,559
2,000
(597)
29,550
230,099
238,919
86,087
–
2,772
27,474
8,611
–
862
6,352
7,621
–
1,680
9,442
1,545
38,857
14,835
12,667
25,055
1,953
985
13,239
41,232
15,489
–
534
12,958
28,981
15,515
–
905
8,991
25,411
80,089
43,816
38,078
283
33,834
17,458
3,559
2,000
–
31,975
89,109
28,143
1,395
6,740
1,545
37,823
14,651
–
820
8,758
24,229
62,052
310,188
282,735
124,165
151,161
The parent company has taken advantage of section 408 of the Companies Act 2006 and has not included its own statement of
comprehensive income in these financial statements. The profit of the Company for the financial year, after taxation, was £9.9m
(2021:£1.0m loss).
The notes on pages 82 to 131 form part of these financial statements. The financial statements on pages 77 to 131 were approved
by the Board of Directors and authorised for issue on 12 September 2022 and are signed on its behalf by:
Ian Mattioli MBE
Chief Executive Officer
Registered number: 03140521
Ravi Tara
Chief Financial Officer
Mattioli Woods plc Annual Report 2022F
Consolidated and Company statements of changes in equity for the year ended 31 May 2022
S
G
79
Issued
capital
(Note 23)
£000
Share
premium
(Note 23)
£000
Merger
reserve
(Note 23)
£000
Equity –
share-based
payments
(Note 23)
£000
Capital
redemption
reserve Own shares
(Note 23)
£000
(Note 23)
£000
Retained
earnings
(Note 23)
£000
Total
equity
£000
269
32,891
10,639
3,848
2,000
(597)
32,460
81,510
Group
As at 1 June 2020
Profit for the year
Share of other comprehensive income
from associates
Total comprehensive income
Transactions with owners of the Group,
recognised directly in equity
Issue of share capital
Share-based payment transactions
Deferred tax recognised in equity
Current tax taken to equity
Reserves transfer
Dividends
–
–
–
14
–
–
–
–
–
–
–
–
943
–
–
–
–
–
–
–
–
6,819
–
–
–
–
–
As at 31 May 2021
283
33,834
17,458
Profit for the year
Share of other comprehensive income
from associates
Total comprehensive income
Transactions with owners of the Group,
recognised directly in equity
Issue of share capital
Share-based payment transactions
Deferred tax recognised in equity
Current tax taken to equity
Reserves transfer
Dividends
As at 31 May 2022
–
–
–
227
–
–
–
–
–
510
–
–
–
–
–
–
109,539
–
–
–
–
–
39,767
–
–
–
–
–
–
–
–
–
1,080
(46)
31
(1,354)
–
3,559
–
–
–
–
1,292
(13)
141
(2,175)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,391
1,391
28
1,419
28
1,419
–
–
(32)
–
1,354
(5,651)
7,776
1,080
(78)
31
–
(5,651)
2,000
(597)
29,550
86,087
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,119
4,119
(19)
(19)
4,100
4,100
–
–
–
–
2,175
(11,041)
149,533
1,292
(13)
141
–
(11,041)
143,373
57,225
2,804
2,000
(597)
24,784
230,099
Mattioli Woods plc Annual Report 2022F
80
Consolidated and Company statements of changes in equity for the year ended 31 May 2022 continued
Issued
capital
(Note 23)
£000
Share
premium
(Note 23)
£000
Merger
reserve
(Note 23)
£000
Equity –
share-based
payments
(Note 23)
£000
Capital
redemption
reserve
(Note 23)
£000
Retained
earnings
(Note 23)
£000
Total
equity
£000
269
32,891
10,639
3,848
2,000
37,236
86,883
Company
As at 1 June 2020
Loss for the year
Share of other comprehensive income from associates
Total comprehensive loss
Transactions with owners of the Company,
recognised directly in equity
Issue of share capital
Share-based payment transactions
Deferred tax recognised in equity
Current tax taken to equity
Reserves transfer
Dividends
–
–
–
–
–
–
–
–
–
14
–
–
–
–
–
–
–
–
943
–
–
–
–
–
6,819
–
–
–
–
–
As at 31 May 2021
283
33,834
17,458
Profit for the year
Share of other comprehensive income from associates
Total comprehensive income
Transactions with owners of the Company,
recognised directly in equity
Issue of share capital
Share-based payment transactions
Deferred tax recognised in equity
Current tax taken to equity
Reserves transfer
Dividends
As at 31 May 2022
–
–
–
227
–
–
–
–
–
510
–
–
–
–
–
–
109,539
–
–
–
–
–
39,767
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(960)
28
(932)
(960)
28
(932)
–
–
(32)
–
1,354
(5,651)
7,776
1,080
(78)
31
–
(5,651)
2,000
31,975
89,109
–
–
–
–
–
–
–
–
–
9,917
(19)
9,917
(19)
9,898
9,898
–
–
–
–
2,175
(11,041)
149,533
1,292
(13)
141
–
(11,041)
–
1,080
(46)
31
(1,354)
–
3,559
–
–
–
–
1,292
(13)
141
(2,175)
–
143,373
57,225
2,804
2,000
33,077
238,919
Mattioli Woods plc Annual Report 2022F
Consolidated and Company statements of cash flows for the year ended 31 May 2022
S
G
81
Operating activities
Profit for the year
Adjustments for:
Depreciation
Amortisation
Impairment of investment in subsidiaries
Gain on bargain purchase
Deferred consideration presented as remuneration
Investment income
Interest expense
Share of profit from associates
Share of profit from partnerships
(Profit)/loss on disposal of property, plant and equipment
Profit on disposal of fixed asset investments
Gain on revaluation of fixed asset investments
Equity-settled share-based payments
Dividend income
Income tax expense
Cash flows from operating activities before changes
in working capital and provisions
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
(Decrease)/increase in provisions
Cash generated from operations
Interest paid
Income taxes paid
Net cash flows from operating activities
Investing activities
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Purchase of software
Purchase of client portfolio
Contingent consideration paid on acquisition of subsidiaries
Acquisition of subsidiaries
Cash received on acquisition of subsidiaries
Investment in other equity holdings
Cash received on hive up of group companies
Dividends received from associate undertakings
Proceeds on disposal of other investments
Loans advanced to subsidiary undertakings
Loans advanced to property syndicates
Loan repayments from property syndicates
Interest received
Dividends received
Net cash flows from investing activities
Financing activities
Proceeds from the issue of share capital
Dividends paid
Repayment of borrowings
Payment of lease liabilities
Net cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at start year
Cash and cash equivalents at end of year
Group
2022
£000
Company
2022
£000
Group
2021
£000
Company
2021
£000
Note
4,119
9,917
1,391
(960)
15,16
17
18
3
26,28
8
9
18
18
18
20
12
15
17
17
26
3
3
18
18
8
14
27
22
22
2,762
7,546
–
–
9,664
(79)
1,006
(1,614)
–
(3)
(406)
(32)
1,729
–
3,870
28,562
(5,251)
1,771
(5,441)
19,641
(6)
(3,258)
16,377
116
(1,001)
(427)
(660)
(1,554)
(72,894)
8,868
(1,574)
–
1,715
686
–
(3)
1,348
34
–
1,580
2,963
21,743
–
9,664
(792)
1,831
(1,614)
(10,461)
(3)
–
–
1,729
(33,561)
2,508
5,504
7,205
823
(5,723)
7,809
(6)
(2,600)
2,772
3,078
–
(288)
3,803
(34)
258
(1,141)
–
46
–
–
1,475
–
3,757
15,117
996
4,962
(713)
20,362
(2)
(2,543)
1,884
2,204
21
(288)
3,803
(367)
448
(1,141)
–
46
–
–
1,475
(2,000)
1,936
7,061
2,368
6,002
(613)
14,818
(11)
(2,255)
5,195
17,817
12,552
116
(959)
(427)
–
(1,554)
(72,894)
–
(1,000)
–
1,715
–
(15,945)
(3)
1,348
29
2,000
169
(419)
(391)
–
(1,111)
(17,736)
4,750
(500)
–
588
8
–
(1,108)
20
19
–
169
(416)
(387)
–
(1,111)
(17,736)
–
(500)
5,230
588
8
–
(1,108)
20
11
2,000
(65,346)
(87,574)
(15,711)
(13,232)
109,277
(11,041)
(15,945)
(1,298)
109,277
(11,041)
–
(910)
80,993
97,326
551
(5,651)
–
(1,077)
(6,177)
551
(5,651)
–
(895)
(5,995)
32,024
21,888
14,955
10,909
(4,071)
25,959
(6,675)
17,584
53,912
25,864
21,888
10,909
Mattioli Woods plc Annual Report 2022F
82
Notes to the financial statements
1. Corporate information
Mattioli Woods plc (“the Company”) is a public limited company incorporated and domiciled in England and Wales, whose shares are
publicly traded on the AIM market of the London Stock Exchange plc. The Company’s registered address is 1 New Walk Place, Leicester,
LE1 6RU. The nature of the Group’s operations and its principal activities are set out in the Chief Executive’s review.
2. Basis of preparation and accounting policies
2.1 Basis of preparation
The consolidated and Company financial statements have been prepared in accordance with UK-adopted International Accounting
Standards in conformity with the requirements of the Companies Act 2006.
The consolidated financial statements comprise the financial statements of Mattioli Woods plc and its subsidiaries (“the Group”) as at
31 May each year. The financial statements have been prepared on the historical cost basis, except for certain financial instruments that
are measured at fair value (Notes 18, 22 and 27), and are presented in pounds, with all values rounded to the nearest thousand pounds
(£000) except when otherwise indicated.
The principal accounting policies adopted are set out in this note and, unless otherwise stated, have been applied consistently to all
periods presented in the financial statements. The financial statements were authorised for issue in accordance with a resolution of the
Directors on 12 September 2022.
2.2 Going concern
The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have
adequate resources to continue in operational existence. In forming this view, the Directors have considered the Company’s and the
Group’s prospects for a period of at least 12 months. Thus they continue to adopt the going concern basis of accounting in preparing
the financial statements.
Further details of the consideration made by the Directors can be found in the Directors’ report on page 70.
2.3 Developments in reporting standards and interpretations
Standards not affecting the financial statements
The following new and revised standards and interpretations have been adopted in the current period:
Standard or interpretation
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 ‘Interest rate benchmark return’
Amendments to IFRS 16 ‘Covid-19 related rent concessions’
Periods commencing
on or after
1 January 2021
1 January 2021
Their adoption has not had any significant impact on the amounts reported in these financial statements but may impact the accounting
for future transactions and arrangements or give rise to additional disclosures.
Future new standards and interpretations
A number of new standards and amendments to standards and interpretations will be effective for future annual periods and, therefore,
have not been applied in preparing these consolidated financial statements. At the date of authorisation of these financial statements,
the following standards and interpretations were in issue but not yet effective but have not been applied in these financial statements:
Standard or interpretation
Annual improvements to IFRS 2018-2020
Amendments to IAS 37 ‘Cost of fulfilling a contract’
Amendments to IAS 16 ‘Proceeds before intended use’
Amendments to IFRS 3 ‘Reference to the conceptual framework’
IFRS 17 Insurance contracts (including amendments to IFRS 17)
Amendments to IAS 1 ‘Classification of liabilities as current or non-current’
Amendments to IAS 12 ‘Deferred tax related to assets and liabilities arising from a single transaction’
Amendments to IAS 1 and IFRS PS2 ‘Disclosure of accounting policies’
Amendments to IAS 1 and IFRS PS2 ‘Definition of accounting estimates’
Periods commencing
on or after
1 January 2022
1 January 2022
1 January 2022
1 January 2022
1 January 2023
1 January 2023
1 January 2023
1 January 2023
1 January 2023
The Directors do not expect the adoption of these standards and interpretations listed above to have a material impact on the financial
statements of the Group in future periods.
2.4 Principal accounting policies
Basis of consolidation
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be
consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting
period as the parent company, using consistent accounting policies. All intra-group balances, income and expenses and unrealised gains
and losses resulting from intra-group transactions are eliminated in full.
Mattioli Woods plc Annual Report 2022F
S
G
83
2.4 Principal accounting policies continued
Business combinations
Business combinations are accounted for using the purchase accounting method. This involves assessing whether any assets acquired
meet the criteria for recognition as separately identifiable intangible assets. Intangible assets are measured on initial recognition at their
fair value at the date of acquisition. Client portfolios are valued by discounting their expected future cash flows over their expected
useful lives, based on the Group’s historical experience. Expected future cash flows are estimated based on the historical revenues and
costs associated with the operation of that client portfolio. The discount rates used estimate the cost of capital, adjusted for risk.
Contingent consideration payable to employees or selling shareholders arising on business combination is assessed as to whether
it should be classified as part of acquisition costs or remuneration for post-acquisition services, using the criteria as defined in IFRS 3
Business Combinations to identify the appropriate treatment. Where contingent consideration payable to employees or selling
shareholders is treated as remuneration, it is recognised as an expense over the period over which the contingent consideration
is earned, reported separately on the face of the statement of comprehensive income, and included within operating cash flows.
Associates
The Company’s share of profits from associates is reported separately in the statement of comprehensive income and the investment is
recognised in the statement of financial position using the equity method. The investment is initially recorded at cost and subsequently
adjusted to reflect the Company’s share of the cumulative profits of the associate since acquisition. Appropriate adjustments to the
Company’s share of the profits or losses after acquisition are made to account for additional amortisation of the associate’s amortisable
assets based on the excess of their fair values over their carrying amounts at the time the investment was acquired.
Property, plant and equipment
Property, plant and equipment is stated at cost, excluding the costs of day-to-day servicing, less accumulated depreciation and
accumulated impairment in value. Such cost includes the cost of replacing part of the plant and equipment when that cost is incurred
if the recognition criteria are met.
Depreciation is provided on all property, plant and equipment at rates calculated to write each asset down to its estimated residual value
over its expected useful life as follows:
• Freehold buildings
• Computer equipment
• Office equipment
• Fixtures and fittings
• Motor vehicles
• Leasehold improvements
2% per annum on cost;
10-33% per annum on cost;
20% per annum on written down values;
20% per annum on written down values;
33% per annum on written down values; and
Straight line over the remaining term of the lease.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use
or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and
the carrying amount of the asset) is included in the statement of comprehensive income in the year the asset is derecognised.
The assets’ residual values, useful lives and methods of depreciation are reviewed, and adjusted if appropriate, at each financial year end.
Investments
The Group accounts for its investments in subsidiaries using the cost model and investments in associates using the equity method.
Other fixed asset investments
Other fixed asset investments are treated as financial assets and classified as either fair value through profit and loss or fair value
through other comprehensive income financial assets.
Goodwill
Goodwill acquired in a business combination is initially measured at cost, being the excess of the cost of the business combination
over the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities. Following initial
recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill
acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units, or groups
of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or
liabilities of the Group are assigned to those units or groups of units.
Each unit or group of units to which the goodwill is allocated:
• Represents the lowest level within the Group at which the goodwill is monitored for internal management purposes; and
• Is not larger than a segment based on the Group’s reporting format determined in accordance with IFRS 8 ‘Operating Segments’.
If a cash-generating unit was to be sold, the difference between the selling price and the net assets and goodwill would be recognised
in the statement of comprehensive income. Where the Group reorganises its reporting structure in a way that changes the composition
of one or more cash-generating units to which goodwill has been allocated, the goodwill is reallocated to the units affected.
Mattioli Woods plc Annual Report 2022F 84
Notes to the financial statements continued
2. Basis of preparation and accounting policies continued
2.4 Principal accounting policies continued
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business
combination is fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any
accumulated amortisation and any accumulated impairment losses. The useful lives of intangible assets are assessed to be either
finite or indefinite. Intangible assets assessed as having finite lives are amortised over their useful economic life as follows:
• Purchased software
• Internally generated software
25% per annum on written down values; and
Straight line over 10 years.
The Group amortises individual client portfolios acquired through business combinations on a straight-line basis over an estimated
useful life based on the Group’s historic experience.
Client portfolios acquired through business combinations and other acquisitions are as follows:
Client portfolio
Date of acquisition
Estimated useful life
Mattioli Woods Pension Consultants (“the Partnership Portfolio”)
Geoffrey Bernstein
Suffolk Life
PCL
JBFS
CP Pensions
City Pensions
Kudos
Ashcourt Rowan
Atkinson Bolton
UK Wealth Management
Torquil Clark
Boyd Coughlan
Taylor Patterson
Lindley Trustees
Maclean Marshall Healthcare
Stadia Trustees
MC Trustees
Broughtons
SSAS Solutions
The Turris Partnership
Hurley Partners
Exempt Property Unit Trust
Montagu
Pole Arnold
Caledonia
Maven Capital Partners UK
Richings Financial Management
Ludlow Wealth Management Group
Ferguson Financial Management
2 September 2003
20 June 2005
27 January 2006
10 July 2007
18 February 2008
30 April 2010
9 August 2010
26 August 2011
23 April 2013
29 July 2013
8 August 2014
23 January 2015
23 June 2015
8 September 2015
5 October 2015
22 January 2016
15 February 2016
7 September 2016
8 August 2018
27 March 2019
19 December 2019
31 July 2020
14 January 2021
2 February 2021
12 April 2021
16 April 2021
30 June 2021
26 August 2021
3 September 2021
10 May 2022
25 Years
25 Years
25 Years
25 Years
25 Years
25 Years
20 Years
20 Years
10 Years
20 Years
10 Years
10 Years
20 Years
20 Years
10 Years
10 Years
10 Years
20 Years
15 Years
20 Years
15 Years
15.7 Years
10 Years
20 Years
20 Years
20 Years
7-20 Years
15 Years
10-20 Years
10 Years
A summary of the policies applied to the Group’s goodwill and intangible assets is as follows:
Useful life
Measurement
method used
Goodwill
Indefinite
Client portfolios
Brand names
Finite
Finite
Software
Finite
Annual impairment
review
Amortised over
a useful economic
life of between 10
and 25 years on a
straight-line basis
Amortised over
a useful economic
life of between 10
and 25 years on a
straight-line basis
Amortised over a
useful economic
life of four years on
a reducing balance
basis or 10 years on
a straight-line basis if
internally generated
Other intangibles
Finite
Amortised over a
useful economic life
of three years
Internally generated
or acquired
Acquired
Acquired
Acquired
Both
Both
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2.4 Principal accounting policies continued
Intangible assets assessed as having finite lives are assessed for impairment whenever there is an indication that the intangible asset
may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed
at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic
benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and treated as
changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of
comprehensive income.
Impairment of non-financial assets
The Group assesses at each reporting date whether there is any indication that an asset may be impaired. If any such indication exists,
or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s
recoverable amount is the higher of an asset or cash-generating unit’s fair value less cost to sell and its value in use, and is determined
for an individual asset, unless the asset does not generate cash inflows that are largely independent from those of other assets or group
of assets.
When the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its
recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money, and the risks specific to the asset. In determining
fair value less cost to sell, an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other
available fair value indicators.
Impairment losses of continuing operations are recognised in the statement of comprehensive income.
For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously
recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group makes an estimate of
the recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to
determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of
the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the
statement of comprehensive income unless the asset is carried at the revalued amount, in which case reversal is treated as a revaluation
increase, except in relation to goodwill.
The following criteria are also applied in assessing impairment of specific non-financial assets:
Goodwill
Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying
value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of the cash-generating unit (or
group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit (or group
of cash-generating units) is less than the carrying amount of the cash-generating unit (or group of cash-generating units) to which
goodwill has been allocated, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future
periods. The Group performs its annual impairment test of goodwill as at 31 May.
Financial assets
Loans and receivables
Loans and receivables are non-derivative financial assets, which have solely payments of principal and interest that are held with the
intention of collecting the cash flows. After initial measurement, loans and receivables are subsequently carried at amortised cost using
the effective interest method, less any allowance for impairment. Amortised cost is calculated taking into account any discount or
premium on acquisition and includes fees and transaction costs. Gains and losses are recognised in the statement of comprehensive
income when the loans and receivables are derecognised or impaired, as well as through the amortisation process.
Cash and short-term deposits
Cash and short-term deposits in the statement of financial position comprise cash at banks and in hand and short-term deposits with an
original maturity of three months or less. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and
short-term deposits as defined above.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as financial assets
at fair value through profit or loss. Fair value movements are recognised in profit or loss.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which the consolidated entity intends
to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial recognition. Fair value movements
are recognised in other comprehensive income.
Impairment of non-derivative financial assets
At each reporting date the Group recognises loss allowances for expected credit losses for all financial assets at amortised cost.
The Group measures loss allowances at an amount equal to lifetime expected credit losses, except for bank balances for which
credit risk has not increased significantly since initial recognition, which are measured at 12-month expected credit losses.
Mattioli Woods plc Annual Report 2022F 86
Notes to the financial statements continued
2. Basis of preparation and accounting policies continued
2.4 Principal accounting policies continued
Impairment of non-derivative financial assets continued
When estimating expected credit loss by determining whether credit risk has increased significantly since initial recognition, the
Group considers reasonable and supportive information that is relevant and available without undue cost or effort, including historic
rates of loss from the issue of credit notes or increases in specific provisions for bad debt and will consider forward-looking factors
where they may impact clients’ abilities to meet cash flow obligations such as significant market movements impacting the value of
clients’ investments.
Trade receivables are deemed to be low credit risk. Our pension and investment products tend to attract high-net-worth clients with
a strong capacity to meet contractual cash flow obligations in the near term and adverse changes in economic conditions in the
longer term may, but will not necessarily, reduce their ability to fulfil cash flow obligations. Our position as fund manager increases the
visibility of credit risks and our ability to ensure fees due from those funds are recovered or recoverable. Further details of our credit risk
management practices are included in Note 30.
Aged trade and other receivables that are reviewed with specific provisions or write offs recognised where recovery is uncertain, such as
balances owing from individuals who are declared bankrupt or deceased, and balances due from pension schemes where the scheme
does not hold liquid or saleable assets. Further provisions for impairment are recognised for expected credit losses on other trade
receivable and accrued income financial assets. The carrying amount of the receivable is reduced through use of an allowance account.
Expected credit loss rates are calculated based on the value of credit notes issued, plus increases in specific provisions against trade
receivables. Credit losses rates are calculated separately for each company within the Group based on credit losses divided by the value
of invoiced revenue over a rolling 12-month period.
Financial liabilities
Trade and other payables
Trade and other payables are recognised at cost, due to their short-term nature. Accruals and deferred income are normally settled
monthly throughout the financial year, with the exception of bonus accruals which are typically paid annually.
Leases
Lease agreements under which the Group is lessee give rise to both a right of use asset and a lease liability.
The lease liability is recognised at the present value of future lease payments under the lease, including any rental incentives, and
discounted at the incremental rate of borrowing of the lessee, which is determined based on the risk-free rate and margin payable
on borrowing over a term equivalent to the lease. Right of use assets are initially recognised at the value of the lease liability.
Lease liabilities are subsequently measured by adjusting the carrying amount to reflect the interest charge, the lease payments made
and any reassessment or lease modifications. Leases with a remaining term less than 12 months at the reporting date are assessed
for a period of expected renewal, and where renewal is expected, the lease liability is remeasured to include the terms of the
expected renewal.
Right of use assets are subsequently depreciated on a straight-line basis over the shorter of the expected life of the asset and the lease
term, adjusted for any remeasurements of the lease liability and amendments to associated provisions for dilapidation on property
leases. Right of use assets are derecognised on handing the leased asset back to the lessor of the asset.
Lease agreements under which the Group is lessor are assessed to determine if they represent operating or finance leases. The Group
has one lease agreement under which the Group is lessor, which is classified as a finance lease, in respect of part of a property for which
the Group is also lessor.
Finance leases of leased assets under which the Group is lessor give rise to both a finance lease receivable and the partial de-recognition
of the right of use asset in respect of the head lease of the leased asset. De-recognition of right of use assets are measured at an amount
equal to the lease receivable.
Finance lease receivables are subsequently measured by adjusting the carrying amount to reflect the interest income, the lease
payments received and any reassessment or lease modifications.
Where a lease has a term of less than 12 months or is of low value, the Group applies the exemption not to recognise right of use assets
and liabilities for these leases. The Group recognises the lease payments associated with these leases as an expense on a straight-line
basis over the lease term.
Interest bearing loans and borrowings
All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs.
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest
method. Gains and losses are recognised in the statement of comprehensive income when the liabilities are derecognised as well as
through the amortisation process.
Contingent consideration
Contingent consideration payable to employees or selling shareholders arising on business combination is assessed as to whether it
should be classified as part of acquisition costs or remuneration for post-acquisition services.
Where classified as acquisition costs a provision for contingent consideration is recognised on acquisition for the present value of
the level of contingent consideration expected to be paid. Subsequent changes to the fair value of the contingent consideration are
recognised in accordance with IFRS 9 in the statement of comprehensive income.
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2.4 Principal accounting policies continued
Contingent consideration continued
Where classified as remuneration, a provision for contingent consideration is recognised based on the level of contingent consideration
expected to be paid and the period over which the contingent consideration relates.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that
an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of
the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, for example under an insurance
contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating
to any provision is presented in the statement of comprehensive income, net of any reimbursement. If the effect of the time value of
money is material, provisions are discounted using a current pre-tax rate which reflects, where appropriate, the risks specific to the
liability. Where discounting is used, the increase in the provision due to the passing of time is recognised as a finance cost.
Provisions include financial liabilities. Where the Group has entered into certain acquisition agreements that provide for contingent
considerations to be paid, the Board estimates the net present value of contingent consideration payable.
Share-based payments
The Group engages in share-based payment transactions in respect of services received from certain employees. In relation to equity-
settled share-based payments, the fair value of services received is measured by reference to the fair value of the shares or share options
granted on the date of grant and is recognised, together with a corresponding increase in equity, as an expense over the period in which
the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the
award (“the vesting date”). The fair value of share options is determined using the Black Scholes Merton pricing model.
The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to
which the vesting period has elapsed and the Group’s best estimate of the number of equity instruments that will ultimately vest. The
statement of comprehensive income charge or credit for a period represents the movement in cumulative expense recognised as at the
beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition,
which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance
conditions are satisfied.
Where the terms of an equity-settled award are modified, the minimum expense recognised is the expense if the terms had not been
modified. An expense is recognised for any modification that increases the total fair value of the share-based payment arrangement or
is otherwise beneficial to the employee as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet
recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated
as a replacement award on the date it is granted, the cancelled and new awards are treated as if they were a modification of the
original award, as described in the previous paragraph.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share
(further details are given in Note 13).
Own shares
Own shares consist of shares held within an employee benefit trust. The Company has an employee benefit trust for the granting of
shares to applicable employees, whose assets are aggregated with those of the rest of the Group in the preparation of the consolidated
financial statements of the Group.
Own shares are recognised at cost as a deduction from equity shareholders’ funds. Subsequent consideration received for the sale of
such shares is also recognised in equity, with any difference between the sale proceeds and the original cost being taken to retained
earnings.
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably
measured. Revenue is measured at the fair value of the consideration receivable for each contractual obligation, excluding discounts,
rebates, and other sales taxes or duty. Terms of business with customers typically include payment periods of up to 60 days, although
specific payment terms can be agreed between the parties. The following information details the nature and timing of the satisfaction
of performance obligations in contracts with customers.
Investment and asset management
Commission income and adviser charges are recognised as follows:
• At a point in time: Initial commission (less provision for clawbacks, as explained in Note 26) and initial adviser charges are recognised
on a ‘point in time’ basis as being earned at the point the performance obligation is met, being when an investment of funds has
been made by the client and submitted to the product provider.
• Over time: Ongoing adviser charges, based on the value of assets invested, are recognised on an ‘over time’ basis during the period
the assets are held in the portfolio or investment fund, with the contract performance obligation being the ongoing management of
investments in accordance with the applicable investment mandate.
Mattioli Woods plc Annual Report 2022F 88
Notes to the financial statements continued
2. Basis of preparation and accounting policies continued
2.4 Principal accounting policies continued
Investment and asset management continued
Discretionary portfolio management (“DPM”) charges are recognised as follows:
• At a point in time: Initial charges on the placing of investments are recognised on a ‘point in time’ basis as being earned at the
point when an investment of funds has been made by the client and submitted to the product provider.
• Over time: Ongoing DPM charges based on the value of assets invested are recognised on an ‘over time’ basis during the period
the assets are held in the portfolio or investment fund, with the contract performance obligation being the ongoing management
of investments in accordance with the applicable investment mandate.
Our ongoing adviser and DPM charges have been compared to observable rates from other providers on a stand-alone basis, with
initial charges being recognised by the residual approach, to ensure that the allocation of the selling price remains appropriate.
Private equity asset management
Private equity asset management fees are recognised as follows:
• At a point in time: Initial charges on the establishment of a VCT and property investment deals are recognised on a ‘point in time’
basis when the investment vehicle funding targets are met. Exit fees are recognised on completion of divestments. Performance
fees are recognised on measurement of the performance or change in valuation of the managed investments.
• Over time: Fund management and administration charges, including charges based on the value of assets held, are
recognised on an ‘over time’ basis during the period the assets are held in the fund.
Pension consultancy and administration
Pension consultancy and administration fees are recognised as follows:
• At a point in time: Mattioli Woods generally invoices pension clients on a six-monthly basis in arrears for costs incurred in advising
on and administering their affairs. Where revenue is contingent on completion of a service, revenue is recognised on a ‘point in
time’ basis at the point that those contractual performance conditions are satisfied. No revenue is recognised if there are significant
uncertainties regarding recovery of the time incurred.
• Over time: To the extent that the Group has a contractual right to invoice for services rendered, revenue is recognised on an
‘over time’ basis as time is incurred on the provision of services, with an estimate being made of what proportion of un-invoiced
time costs will be recoverable. Recoverability is measured as a percentage of the total time costs incurred on clients’ affairs
compared to the proportion of historical time costs actually invoiced.
Pension consultancy and administration fees have been compared to observable rates from other providers on a stand-alone basis, with
establishment charges being recognised by the residual approach, to ensure that the allocation of the selling price remains appropriate.
Property management
Property management fees are recognised as follows:
• At a point in time: Initial charges on the establishment of a private investment syndicate are recognised on a ‘point in time’ basis
when the syndicate completes its investment.
• Over time: Fund management and private investment syndicate charges, including charges based on the value of assets held,
are recognised on an ‘over time’ basis during the period the assets are held in the fund or syndicate.
Employee benefits
Employee benefits fees are recognised as follows:
• At a point in time: Fee income from services provided on the set up of an employee benefits scheme or provision of non-recurring
employee benefits services are recognised on a ‘point in time’ basis on completion of rendering those services, being the point that
those contractual performance conditions are satisfied.
• Over time: Ongoing management charges on employee benefits schemes are recognised on an ‘over time’ basis over the period
to which they relate.
Interest income
Revenue is recognised as interest accrues (using the effective interest method that is the rate that exactly discounts estimated future
cash receipts through the expected life of the financial instrument to the net carrying amount of the financial asset).
Taxes
Current income tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from
or repaid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively
enacted by the reporting date.
Current income tax relating to items recognised directly in equity is recognised in equity and not in the statement of comprehensive income.
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2.4 Principal accounting policies continued
Taxes continued
Deferred income tax
Deferred income tax is provided using the liability method on temporary differences at the reporting date between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax balances are recognised for all
taxable temporary differences, except where the deferred income tax balance arises from the initial recognition of goodwill or of an
asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss.
Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax
losses, to the extent that it is probable that taxable profit will be available against, which the deductible temporary differences, and the
carry forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised
deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that
future taxable profit will allow the deferred income tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised
or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantially enacted at the reporting date.
Deferred income tax relating to items recognised directly in equity is recognised in equity and not in the statement of comprehensive
income. Deferred income tax assets related to temporary differences arising on share-based payments to employees are based on the
market value of the Company’s shares at the year end.
Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets
against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.
Sales tax
Revenues, expenses and assets are recognised net of the amount of sales tax, except:
• Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case
the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
• Receivables and payables that are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables
in the statement of financial position.
Dividend recognition
Dividend distributions to the Company’s shareholders are recognised in the accounting period in which the dividends are declared and
paid, or if earlier, in the accounting period when the dividend is approved by the Company’s shareholders at the Annual General Meeting.
Pension costs
The Group makes discretionary payments into the personal pension schemes of certain employees. Contributions are charged
to the statement of comprehensive income as they are payable.
2.5 Critical accounting judgements and sources of significant estimation uncertainty
The preparation of the financial statements requires management to make estimates and assumptions that affect the reported
amount of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities. If in the future such estimates and
assumptions, which are based on management’s best judgement at the date of preparation of the financial statements, deviate from
actual circumstances, the original estimates and assumptions will be modified as appropriate in the period in which the circumstances
change. The areas where a higher degree of judgement or complexity arises, or where assumptions and estimates are significant to the
consolidated financial statements, are discussed below.
Critical accounting judgements
Contingent payments to selling shareholders arising from a business combination
Contingent consideration payable to employees or selling shareholders arising on a business combination is assessed as to whether
it should be classified as part of acquisition costs or remuneration for post-acquisition services, using the criteria as defined in IFRS
3 Business Combinations to identify the appropriate treatment. Where contingent consideration payable to employees or selling
shareholders is treated as acquisition costs, its fair value at acquisition forms part of the intangible assets arising on acquisition.
Where it is treated as remuneration, it is recognised as an expense over the period over which the contingent consideration is earned.
Two acquisitions were completed in the year ended 31 May 2022 which include contingent consideration classified as remuneration. If
these had been classified as part of acquisition cost, overhead expenses would be lower by £4,572,000, finance costs would be higher
by £1,715,000, therefore profit before tax would be higher by £2,857,000. In addition, goodwill would be higher by £14,718,000 and
provisions for contingent consideration would be higher by £16,433,000.
Mattioli Woods plc Annual Report 2022F 90
Notes to the financial statements continued
2. Basis of preparation and accounting policies continued
2.5 Critical accounting judgements and sources of significant estimation uncertainty continued
Sources of significant estimation uncertainty
Acquisitions and business combinations
When an acquisition arises, the Group is required under UK-adopted International Accounting Standards to calculate the Purchase Price
Allocation (“PPA”). The PPA requires companies to report the fair value of assets and liabilities acquired and it establishes useful lives
for identified assets. The identification and the valuation of the assets and liabilities acquired involves estimation and judgement when
determining whether the recognition criteria are met.
Subjectivity is also involved in the PPA with the estimation of the future value of brands, technology, customer relationships and
goodwill. The fair value of separately identifiable intangible assets acquired during the year was £67.7m (2021: £18.3m), with the key
assumptions used to calculate these fair values being those around the estimated useful lives of the acquired customer relationships, the
estimated future cash flows expected to arise from these relationships and the appropriate discount rate to be used to discount these
cash flows to their present value.
Estimated useful life sensitivity of -5 years is used, representing a severe but plausible rate of client attrition if customer relationships
acquired are damaged as a result of the business combination. Growth rate sensitivities are set at a level to either minimise or altogether
remove the impact of assumed growth in cash flows derived from the acquired portfolio. Discount rate sensitivity of +1.0% represents a
plausible variance in discount rate as a result of a range of judgements used in following the capital asset pricing model to determine an
appropriate weighted average cost of capital for the acquired businesses.
The sensitivity of the fair value of the highest-valued customer relationships acquired during the year to changes in the key assumptions
are as follows:
Acquisition of Maven Capital Partners UK LLP
Estimated useful life
Growth rate
Discount rate
Acquisition of Ludlow Wealth Management Group
Estimated useful life
Growth rate
Discount rate
Base
assumption
Change in
assumption
7-20 years –5 years
to 0.0%
0.0%-2.0%
+1.0%
10.5%-13.0%
Base
assumption
Change in
assumption
10-20 years –5 years
to 0.0%
+1.0%
2.4%
10.5%
Decrease
in fair value
£000
(7,182)
(3,071)
(3,460)
Decrease
in fair value
£000
(3,111)
(4,145)
(1,325)
Other areas of estimation uncertainty
The Group also notes the following other areas of estimation uncertainty, which are not considered areas of significant estimation
uncertainty:
Impairment of intangible assets
For the purposes of impairment testing, acquired client portfolios and goodwill are allocated to the group of cash-generating units
(“CGUs”) that are expected to benefit from the business combination.
The Group reviews whether acquired client portfolios are impaired on an annual basis, or more frequently if events or changes in
circumstances indicate that the carrying value may be impaired. This comprises an estimation of the fair value less cost to sell and the
value in use of the acquired client portfolios.
Value in use calculations are utilised to calculate recoverable amounts of a CGU. Value in use is calculated as the net present value of the
projected pre-tax cash flows of the CGU in which the client portfolio is contained. The net present value of cash flows is calculated by
applying a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to that asset,
based on the Group’s pre-tax Weighted Average Cost of Capital (“WACC”). The Group has applied a WACC of 9.8% (2021: 10.5%) to each
of its operating segments.
The key assumptions used in respect of value in use calculations are those regarding growth rates and anticipated changes to revenues
and expenses during the period covered by the calculations. Changes to revenue and costs are based upon management’s expectation.
Forecast cash flows are derived from the budget for the three years to 31 May 2024, extrapolated for a further two years assuming
medium-term growth of 5.0% (2021: 5.0%), thereafter extrapolating these cash flows using a long-term growth rate of 2.0% (2021: 2.0%),
which management considers conservative against industry average long-term growth rates.
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2.5 Critical accounting judgements and sources of significant estimation uncertainty continued
Impairment of intangible assets continued
The carrying amount of client portfolios at 31 May 2022 was £112.2m (2021: £40.6m). No impairment provisions have been made during
the year (2021: £nil) based upon the Directors’ review.
The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the
CGUs to which the goodwill has been allocated. In assessing value in use, the estimated future cash flows expected to arise from the
CGU are discounted to their present value using a pre-tax discount rate of 9.8%, reflecting current market assessments of the time value
of money and the risks specific to that asset, based on the Group’s WACC.
The carrying amount of goodwill at 31 May 2022 was £83.5m (2021: £17.9m). No impairment provisions have been made during the year
(2021: £nil) based upon the Directors’ review.
The key assumptions used in respect of value in use calculations are those regarding growth rates and anticipated changes to revenues
and costs during the period covered by the calculations, based upon management’s expectation, and discount rates. Sensitivities to key
assumptions are disclosed in Note 19.
Contingent consideration and contingent remuneration payable on acquisitions
Whether contingent consideration is classified as acquisition cost or remuneration, provisions for contingent consideration and
contingent remuneration require an assessment of the future values expected to be paid out.
Using forecasts approved by the Board covering the period of the contingency, provisions for consideration and remuneration are
recognised based on the maximum value expected to fall due. A material change to the carrying value would only occur if the acquired
business fell significantly short of the target earnings, or if termination of employment of a management seller results in forfeiture of
rights to future contingent payments. The carrying amount of contingent consideration provided for at 31 May 2022 was £9.3m (2021:
£2.9m) and contingent remuneration provided for at 31 May 2022 was £7.8m (2021: £4.0m).
The key assumption used in determining the value of these provisions is the forecast financial performance as applied in the terms
of the contingent consideration arrangement. For all acquisitions that have completed their contingent payment period, contingent
consideration has been paid in full.
Provisions
As detailed in Note 26, the Group recognises provisions for client claims, contingent consideration payable on acquisitions, commission
clawbacks, dilapidations, onerous contracts and other obligations which exist at the reporting date. Estimates applied in determining
provisions include assessment of the likelihood of a claim being successful and the actual amount and timing of future cash flows,
which are dependent on future events. Management reviews these provisions at each reporting date to ensure they are measured at the
current best estimate of the expenditure required to settle the obligation. Any difference between the amounts previously recognised
and the current estimate is recognised immediately in the statement of comprehensive income.
Recoverability of accrued time costs and disbursements
The Group recognises accrued income in respect of time costs and disbursements incurred on clients’ affairs during the accounting
period, which have not been invoiced at the reporting date. This requires an estimation of the recoverability of the unbilled time costs
and disbursements.
The estimated rate of recovery of 71.9% (2021: 67.8%) is based on historic actual recovery rates measured over a period of twelve (2021:
twelve) months, calculated based on the value of invoices, net of credit losses, divided by the gross value of the charges based on
internal charge out rates. The carrying amount of accrued time costs and disbursements at 31 May 2022 was £4.8m (2021: £4.2m).
The sensitivity of a 5.0% change in the estimated recoverability of accrued time costs and disbursements is appropriate as rates have
fluctuated +/- 2.0% over the past 12 months, with 5.0% representing a severe but plausible degradation of recovery rates. Sensitivity to
a 5.0% (2021: 5.0%) change, with all other variables held constant, is £0.3m (2021: £0.3m) of the Group’s profit before tax. There is no
material impact on the Group’s equity.
3. Business combinations
The Group completed three (2021: five) acquisitions during the year which are treated as business combinations. Transaction costs
of £3.7m (2021: £2.6m) incurred during the year to 31 May 2022 have been expensed and are included in administrative expenses
in the consolidated statement of comprehensive income and operating cash flows in the consolidated statement of cash flows in the
period in which they were incurred.
Acquisitions completed during the year
Acquisition of Maven Capital Partners UK LLP
On 30 June 2021 the Company completed the acquisition of 100% of the membership interests in Maven Capital Partners UK LLP
(“Maven”) for an aggregate maximum consideration of up to £100.0m (including, subject to certain conditions being satisfied, up to
£20.0m of deferred consideration), comprised of a combination of cash and new ordinary shares.
Maven is one of the UK’s leading private equity and alternative asset managers, providing funding options to UK SMEs, and offering
investment opportunities in VCTs, private equity and property. The owner-led business comprises 12 partners, with a regionally based
team of 91 investment executives and support professionals. Maven operates across 10 offices in Glasgow, Edinburgh, Manchester,
Birmingham, London, Newcastle, Bristol, Nottingham, Durham and Reading.
Mattioli Woods plc Annual Report 2022F 92
Notes to the financial statements continued
3. Business combinations continued
Acquisitions completed during the year continued
Acquisition of Maven Capital Partners UK LLP continued
Maven and its indirect subsidiary company Maven Property Investments Limited (“MPIL”) are authorised and regulated by the FCA
as Alternative Investment Fund Managers (“AIFMs”). Maven Capital Investments Limited (“MCIL”), a direct subsidiary of Maven, is an
investment holding company with co-investment commitments into a number of regional funds. MCIL also generates management
fees from property deals. MPIL is a subsidiary of MCIL and is the regulated manager for property deals and generates monitoring and
accounting fees from those transactions.
Maven manages £767m in AuM, comprising:
• Four evergreen VCTs, listed on the London Stock Exchange, providing growth capital for UK based younger companies;
• Seven regional funds, providing equity and debt growth capital for SMEs in specific UK regions;
• An MBO fund, supporting management buyouts in the UK smaller and lower mid-market; and
• MIP, funding individual private equity and property deals, on a deal by deal basis:
ƀ Equity capital for smaller MBO transactions of later stage SMEs across the UK
ƀ Equity capital for the development of hotels, purpose-built student accommodation, offices, residential construction
and strategic land transactions
Maven primarily generates revenue from management fees and general partner’s priority share which are annual management
charges generated on the VCTs, regional funds, MBO fund and MIP deals.
Performance fees may be generated on the VCT funds based on increases in net asset value and are structured as carried interest
for MIP deals.
Other income is generated from Director and monitoring fees, third-party administration and investment income.
The fair values of the assets and liabilities of Maven as at the date of acquisition are set out in the table below:
Fair value
recognised on
acquisition
£000
Fair value
Previous
adjustments carrying value
£000
£000
Property, plant and equipment
Right of use assets
Intangible assets – Client portfolio
Intangible assets – Brand
Investments
Trade and other receivables
Cash at bank
Assets
Trade and other payables
Lease liabilities
Provisions
Deferred tax liability
Liabilities
Total identifiable net assets at fair value
Goodwill
Total acquisition cost
Analysed as follows:
Initial cash consideration
Net shares in Mattioli Woods
Net asset excess
Contingent deferred consideration
Discounting of contingent deferred consideration
Total acquisition cost
Cash outflow on acquisition:
Cash paid
Cash acquired
Net asset excess
Acquisition costs
Net cash outflow
333
1,972
54,483
1,951
3,909
4,548
4,648
–
1,972
54,483
1,951
–
–
–
333
–
–
–
3,909
4,548
4,648
71,844
58,406
13,438
(6,146)
(1,998)
(266)
(13,851)
26
(1,998)
–
(13,851)
(6,172)
–
(266)
–
(22,261)
(15,823)
(6,438)
49,583
39,787
89,370
50,000
33,773
5,000
800
(203)
89,370
50,000
(4,648)
5,000
1,669
52,021
In addition to the acquisition cost, management sellers will receive remuneration of up to £19.2m over a four-year earn out to 30 June 2025,
subject to the achievement of certain performance conditions, including the financial performance of Maven meeting financial targets.
Mattioli Woods plc Annual Report 2022F
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93
Acquisitions completed during the year continued
Acquisition of Richings Financial Management
On 26 August 2021 the Company completed the acquisition of 100% of the share capital of Richings Financial Management Ltd
(“Richings”) for an initial consideration of £0.9m and potential further consideration of up to £0.9m dependent on the attainment
of specified performance targets in the two years after completion.
Founded in 1991, Richings is an established financial planning and wealth management business, working with over 270 private
client families with approximately £70m of assets under advice. Richings is based in Iver and employs an experienced team of four staff,
all of whom will remain with Mattioli Woods following completion.
In the year ended 30 April 2021, Richings generated revenues of £0.66m with a profit before taxation of £0.34m. At 30 April 2021
Richings’ gross assets were £0.35m and net assets were £0.26m. The acquisition is expected to be earnings enhancing in the first
full year of ownership.
The total consideration comprises:
• An initial consideration of £0.9m cash on a cash-free, debt-free basis (subject to adjustment for the value of net assets acquired); and
• Contingent consideration of up to £0.9m payable in cash on the first and second anniversaries of completion, subject to certain
profit targets being met.
The fair values of the assets and liabilities of Richings as at the date of acquisition are set out in the table below:
Fair value
Previous
adjustments carrying value
£000
£000
–
1,325
–
–
1,325
–
(331)
(331)
10
–
74
405
489
(130)
–
(130)
Property, plant and equipment
Intangible assets – Client portfolio
Trade and other receivables
Cash at bank
Assets
Trade and other payables
Deferred tax liability
Liabilities
Total identifiable net assets at fair value
Goodwill
Total acquisition cost
Analysed as follows:
Initial cash consideration
Net asset excess
Contingent deferred consideration
Discounting of contingent deferred consideration
Total acquisition cost
Cash outflow on acquisition:
Cash paid
Cash acquired
Net asset excess
Acquisition costs
Net cash outflow
Fair value
recognised on
acquisition
£000
10
1,325
74
405
1,814
(130)
(331)
(461)
1,353
214
1,567
900
292
441
(66)
1,567
900
(405)
292
91
878
In addition to the acquisition cost, management sellers will receive remuneration of up to £459,000 over a two-year earn out to
26 August 2023, subject to the achievement of certain performance conditions, including the financial performance of Richings meeting
financial targets.
Mattioli Woods plc Annual Report 2022F
94
Notes to the financial statements continued
3. Business combinations continued
Acquisitions completed during the year continued
Acquisition of Ludlow Wealth Management
On 3 September 2021 the Company completed the acquisition of 100% of the issued share capital of LWMG Topco Limited (the holding
company of Ludlow Wealth Management Group Ltd) (“Ludlow Wealth Management”), for an aggregate consideration and other deferred
payments of up to £43.5m on a cash free, debt free basis as at the agreed ‘locked box’ balance sheet date of 30 September 2020. The
amount payable in respect of the Ludlow Wealth Management acquisition includes, subject to the satisfaction of certain performance
conditions following completion of the Ludlow Wealth Management acquisition, up to £6.4m of deferred consideration and up to £1.0m
of bonuses payable to non-shareholder employees. In addition, in accordance with the locked box adjustment mechanism, in respect
of the period commencing on the locked box date of 30 September 2020 and ending on the date of completion of the Ludlow Wealth
Management acquisition, the Company will pay to the sellers of Ludlow Wealth Management an amount in respect of the estimated
cash profits of Ludlow Wealth Management during such post-locked box date period calculated at a daily rate of £6,173.24 for the total
number of days during such period. The consideration for the Ludlow Wealth Management acquisition will be satisfied by a combination
of cash and new ordinary shares.
Established in 1993, Ludlow Wealth Management is one of the largest providers of investment, financial planning and pension advice
in the North-West of England. Ludlow Wealth Management has 61 employees, including 22 advisers operating from offices in Fylde,
Preston, Burnley, Liverpool and Southport.
Ludlow Wealth Management manages £1,622m of AuA as at 31 March 2021 for 3,371 clients, with an average of £74m AuA per adviser
and an average client size of £0.48m AuA. Ludlow Wealth Management has delivered growth, organically and by acquisition; completing
16 acquisitions in the last 12 years, adding £588m of AuA and £2.4m of recurring revenue. Ludlow Wealth Management currently
outsources investment management.
In the year ended 30 September 2020, Ludlow Wealth Management generated revenue of £9.4m, of which 91% was recurring. Adjusted
EBITDA for the period was approximately £3.3m (adding back monitoring and Directors’ fees incurred to oversee private equity
investment in business), with an associated adjusted EBITDA margin of 35% and a high cash conversion. As at 30 September 2020,
Ludlow Wealth Management had gross assets of £16.8m and net liabilities of £0.5m (including net debt of £13.7m). Ludlow Wealth
Management has maintained momentum despite adverse market conditions and management expects material profit growth over the
period of earn out.
The total consideration comprises:
• An initial consideration of £36.1m, calculated on a cash free, debt free basis as at the agreed locked box balance sheet date of
30 September 2020, and which will be satisfied as follows:
ƀ an aggregate amount of £30.3m will be payable in cash on Ludlow Wealth Management completion in respect of consideration
for the acquisition of Ludlow Wealth Management and repayment of indebtedness and borrowings of Ludlow Wealth
Management; and
ƀ £5.8m will be satisfied by the issue of new ordinary shares to certain individual sellers who are members of the Ludlow Wealth
Management management team; and, in addition
ƀ in accordance with the locked box adjustment mechanism, in respect of the period commencing on the locked box date of
30 September 2020 and ending on the date of completion of the Ludlow Wealth Management acquisition, the Company has
agreed to pay to the sellers of Ludlow Wealth Management an amount in respect of the estimated cash profits of Ludlow Wealth
Management during such post-locked box date period calculated at a daily rate of £6,173.24 for the total number of days during
such period; and
• Deferred consideration, subject to the satisfaction of certain performance conditions, up to £6.4m and up to £1.0m of bonuses
payable to non-shareholder employees of Ludlow Wealth Management, in each case, payable in cash and calculated on the basis
of (a) the amount of the adjusted EBITDA of Ludlow Wealth Management for the 12 months ending 30 September 2023 multiplied
by 8.25; less (b) the amount of the Initial Ludlow Wealth Management Consideration; and less (c) the aggregate value of all
consideration paid or payable by Mattioli Woods in respect of any eligible acquisition of any company or business that is integrated
into Ludlow Wealth Management and which completes between Ludlow Wealth Management Completion and 30 September 2023.
Ludlow Wealth Management’s experienced management team have been retained by Mattioli Woods following the Ludlow Wealth
Management acquisition, which is expected to be earnings-enhancing in the first full year of ownership. In addition, the Company
expects to realise revenue and cost synergies from first full year onwards, including investment in Mattioli Woods’ discretionary portfolio
management service and alternative investment strategies by certain of Ludlow Wealth Management’s clients.
Mattioli Woods plc Annual Report 2022F S
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95
Acquisitions completed during the year continued
Acquisition of Ludlow Wealth Management continued
The fair values of the assets and liabilities of Ludlow Wealth Management as at the date of acquisition are set out in the table below:
Fair value
recognised on
acquisition
£000
Fair value
Previous
adjustments carrying value
£000
£000
Property, plant and equipment
Right of use assets
Intangible assets – Goodwill
Intangible assets – Client portfolio
Trade and other receivables
Cash at bank
Assets
Trade and other payables
Loans and other borrowings
Lease liabilities
Provisions
Deferred tax liability
Liabilities
Total identifiable net assets at fair value
Goodwill
Total acquisition cost
Analysed as follows:
Initial cash consideration
Net shares in Mattioli Woods
Contingent consideration
Discounting of contingent consideration
Total acquisition cost
Cash outflow on acquisition:
Cash paid
Cash acquired
Acquisition costs
Net cash outflow
179
263
1,317
21,337
682
3,815
27,593
(1,785)
(15,945)
(253)
(124)
(5,238)
–
263
(8,261)
18,148
(11)
–
179
–
9,578
3,189
693
3,815
10,139
17,454
–
–
(253)
–
(5,196)
(1,785)
(15,945)
–
(124)
(42)
(23,345)
(5,449)
(17,896)
4,248
24,302
28,550
16,701
6,047
7,407
(1,605)
28,550
16,701
(3,815)
1,012
13,898
Loans and other borrowings of £15.9m were settled in full following the completion of the acquisition of Ludlow Wealth Management.
Mattioli Woods plc Annual Report 2022F
96
Notes to the financial statements continued
3. Business combinations continued
Acquisitions completed during the prior year
On 31 July 2020, Mattioli Woods acquired the entire issued share capital of Hurley Partners Limited (“Hurley”), a private client adviser
and asset management business with offices in London, Surrey and Manchester.
On 11 January 2021, Mattioli Woods completed the acquisition of the Exempt Property Unit Trust (“EPUT”) administration business of
BDO Northern Ireland (“BDO NI”) for a nominal initial consideration plus (capped) deferred consideration representing 50% of BDO NI
EPUT profits before tax for the 30 months following completion. Mattioli Woods has also acquired the entire issued share capital of
Callender Street Nominees Limited (“CSNL”) from Aqua Trust Company Limited in Jersey as part of the transaction.
On 2 February 2021, Mattioli Woods acquired the entire issued share capital of Montagu Limited (“Montagu”), a financial planning
and wealth management business based in Twickenham, London.
On 12 April 2021, Mattioli Woods acquired the entire issued share capital of Pole Arnold Financial Management Limited (“Pole Arnold”),
a financial planning and wealth management business with offices in Leicester and London.
On 12 April 2021, Mattioli Woods acquired the entire issued share capital of Caledonia Asset Management Limited (“Caledonia”),
a financial planning and wealth management business based in Edinburgh.
Further details of each of the acquisitions competed in the prior year can be found in the Annual Report and Accounts for the year ended
31 May 2021.
The fair values of the assets and liabilities of each of the prior year acquisitions as at the date of acquisition are set out in the table below:
Fair value recognised on acquisition
Property, plant and equipment
Right of use assets
Client portfolio
Trade and other receivables
Prepayments and accrued income
Cash at bank
Assets
Trade and other payables
Accruals and deferred income
Other taxation and social security
Corporation tax
Lease liabilities
Provisions
Deferred tax liability
Liabilities
Total identifiable net assets at fair value
Goodwill
Acquisition cost
Analysed as follows
Initial cash consideration
Net assets adjustment to initial cash consideration
Net shares in Mattioli Woods
Contingent consideration
Discounting of contingent consideration
Acquisition cost
Cash outflow on acquisition:
Cash paid
Cash acquired
Acquisition-related costs
Net cash outflow
Hurley Partners
Limited EPUT business
£000
£000
Pole Arnold
Financial
Montagu Management
Limited
Limited
Caledonia
Asset
Management
Limited
–
–
537
–
138
–
675
–
–
–
–
–
–
(102)
(102)
573
(288)
285
107
–
–
201
(23)
285
£000
3
53
1,716
74
17
1,173
3,036
(1)
(130)
(17)
(82)
(53)
–
(326)
£000
13
–
3,762
99
19
1,039
4,932
(16)
(284)
(118)
(109)
–
(5)
(715)
(609)
(1,247)
2,428
800
3,228
1,090
1,003
300
950
(115)
3,228
3,684
718
4,402
3,500
399
503
–
–
4,402
£000
7
30
680
3
24
267
Total
£000
135
689
18,290
1,001
828
4,750
1,011
25,693
(25)
(31)
–
(43)
(30)
–
(129)
(258)
752
886
(315)
(516)
(251)
(509)
(660)
(167)
(3,487)
(5,905)
19,787
7,183
1,638
26,970
860
111
105
640
(78)
16,223
1,513
6,829
2,763
(358)
1,638
26,970
107
–
24
131
2,093
(1,173)
103
1,023
3,899
(1,039)
145
3,005
971
(267)
89
17,736
(4,750)
654
793
13,640
112
606
11,595
825
630
2,271
16,039
(273)
(71)
(116)
(275)
(577)
(162)
(2,215)
(3,689)
12,350
5,067
17,417
10,666
–
5,921
972
(142)
17,417
10,666
(2,271)
293
8,688
Mattioli Woods plc Annual Report 2022F
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97
Acquisitions completed during the prior year continued
Negative goodwill of £288,000 on the acquisition of the EPUT business was recognised in the statement of comprehensive income
as a gain on bargain purchase in the prior year.
In addition to the acquisition cost, management sellers of Hurley Partners will receive remuneration of up to £7.0m over a two-year
earn out to 31 July 2022, subject to the achievement of certain performance conditions including the financial performance of Hurley
meeting financial targets.
In addition to the acquisition cost, management sellers of Pole Arnold will receive remuneration of up to £3.0m over a two-year earn
out to 12 April 2023, subject to the achievement of certain performance conditions including the financial performance of Pole Arnold
meeting financial targets.
See Note 28 for further details of commitments and contingencies.
4. Revenue
The Group derives its revenue from the rendering of services over time and at a point in time across all operating segments. Further
details of accounting policies for the recognition of revenue are disclosed in Note 2. The timing of recognition of the revenues of each
operating segment is analysed as follows:
Timing of revenue recognition
At a point in time:
Investment and asset management
Private equity asset management
Pension consultancy and administration
Property management
Employee benefits
Over time:
Investment and asset management
Private equity asset management
Pension consultancy and administration
Property management
Employee benefits
2022
£000
3,654
8,543
607
92
1,346
2021
£000
2,041
–
1,018
104
917
14,242
4,080
46,771
17,610
19,111
6,181
4,311
93,984
108,226
31,329
–
17,789
4,806
4,611
58,535
62,615
The following table shows the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or
partially unsatisfied) as at the end of the reporting period:
Contract liabilities
Investment and asset management
Private equity asset management
Pension consultancy and administration
Property management
Employee benefits
Group
2022
£000
13
2,866
2,303
–
647
5,829
Company
2022
£000
–
–
1,087
–
647
1,734
Group
2021
£000
52
–
2,218
204
485
2,959
Company
2021
£000
–
–
967
–
485
1,452
The Group expects that 100% of the transaction price allocated to the unsatisfied contracts as at 31 May 2022 will be recognised
as revenue during the next reporting period, amounting to £5,829,000 (2021: £2,959,000).
Mattioli Woods plc Annual Report 2022F
98
Notes to the financial statements continued
4. Revenue
The following table shows the movement in contract liabilities in the period:
Contract liabilities
At 1 June 2021
Revenue recognised on completion of performance obligations
Contract liabilities acquired
Consideration received allocated to performance obligations that are unsatisfied at the period end
At 31 May 2022
Group
£000
Company
£000
2,959
(2,959)
2,037
3,792
5,829
1,452
(1,452)
–
1,734
1,734
5. Seasonality of operations
Historically, revenues in the second half-year have been typically higher than in the first half. Time or activity-based pension consultancy
and administration fees are impacted by SSAS scheme year ends being linked to the sponsoring company’s year end, which is often in
December or March, coupled with there typically being increased activity on SSAS and SIPP schemes prior to the end of the fiscal year
on 5 April.
Despite further diversification of the Group’s wealth management and employee benefits revenue streams, the Directors believe there is
still some seasonality of operations, although a substantial element of the Group’s revenues are now geared to the prevailing economic
and market conditions.
6. Segment information
The Group’s objective is to fully integrate the businesses it acquires, to enable it to deliver holistic solutions across its wide and diverse
client base. The Group’s operating segments comprise the following:
• Pension consultancy and administration – Fees earned by Mattioli Woods for setting up and administering pension schemes.
Additional fees are generated from consultancy services provided for special one-off activities and the provision of bespoke scheme
banking arrangements;
• Private equity asset management – Income generated where Maven Capital Partners manages VCTs and other investments, including
fund management, administration, establishment, exit and performance fees in respect of the investments for which it is manager;
• Investment and asset management – Income generated from the management and placing of investments on behalf of clients;
• Property management – Income generated where Custodian Capital manages private investor syndicates, facilitates direct
commercial property investments on behalf of clients or acts as the external discretionary manager for Custodian REIT plc; and
• Employee benefits – Income generated from corporate clients for consultancy and administration of employee benefits offering
including group personal pensions and other insurance products.
Each segment represents a revenue stream subject to risks and returns that are different to other operating segments, although each operating
segment’s products and services are offered to broadly the same market. The Group operates exclusively within the United Kingdom.
Operating segments
The operating segments defined above all utilise the same intangible assets, property, plant and equipment and the segments have
been financed as a whole, rather than individually. The Group’s operating segments are managed together as one business. Accordingly,
certain costs are not allocated across the individual operating segments, as they are managed on a group basis. Segment profit or loss
reflects the measure of segment performance reviewed by the Board of Directors (the Chief Operating Decision Maker).
The following tables present revenue and profit information regarding the Group’s operating segments for the two years ended 31 May
2022 and 2021 respectively.
Year ended 31 May 2022
Revenue
External customers
Results
Segment profit before tax
Year ended 31 May 2021
Revenue
External customers
Results
Segment profit before tax
Investment
and asset
Private
equity asset
Property
management management administration management
£000
£000
£000
£000
Pension
consultancy
and
Employee
benefits
£000
Total
segments
£000
Corporate
costs Consolidated
£000
£000
50,425
26,153
19,718
6,273
5,657
108,752
–
108,226
12,889
7,220
3,918
1,541
760
26,328
(18,339)
7,989
Investment
and asset
Private
equity asset
Property
management management administration management
£000
£000
£000
£000
Pension
consultancy
and
Employee
benefits
£000
Total
segments
£000
Corporate
costs Consolidated
£000
£000
33,370
–
18,807
4,910
5,528
62,615
–
62,615
8,054
–
5,787
605
755
15,201
(10,053)
5,148
Mattioli Woods plc Annual Report 2022F
6. Segment information continued
Segment assets
The following table presents segment assets of the Group’s operating segments:
Investment and asset management
Private equity asset management
Pension consultancy and administration
Property management
Employee benefits
Segment operating assets
Corporate assets
Total assets
S
G
99
2022
£000
94,206
102,502
23,803
4,889
5,552
230,952
79,236
2021
£000
46,042
–
24,096
2,189
5,511
77,838
46,327
310,188
124,165
Segment operating assets exclude property, plant and equipment, certain items of computer software, investments, current and
deferred tax balances and cash balances, as these assets are considered corporate in nature and are not allocated to a specific
operating segment.
Reconciliation of assets
Segment operating assets
Property, plant and equipment
Right of use assets
Intangible assets
Deferred tax asset
Prepayments and other receivables
Income tax receivable
Finance lease receivable
Investments
Cash and short-term deposits
Total assets
2022
£000
2021
£000
230,952
77,838
14,126
3,322
1,761
776
4,985
–
354
–
53,912
14,340
2,180
1,666
951
4,956
30
290
26
21,888
310,188
124,165
Acquired intangibles and amortisation thereon relate to a specific transaction and are allocated between individual operating segments
based on the headcount or revenue mix of the cash-generating units at the time of acquisition. The subsequent delivery of services
to acquired clients may be across a number or all operating segments, comprising different operating segments to those the acquired
intangibles have been allocated to.
Liabilities have not been allocated between individual operating segments, as they cannot be allocated on anything other than an
arbitrary basis.
Corporate costs
Certain administrative expenses including acquisition costs, amortisation of software, depreciation of property, plant and equipment,
irrecoverable VAT, legal and professional fees and professional indemnity insurance are not allocated between segments that are
managed on a unified basis and utilise the same intangible and tangible assets.
Mattioli Woods plc Annual Report 2022F
100
Notes to the financial statements continued
6. Segment information continued
Corporate costs continued
Finance income and expenses, gains and losses on the disposal of assets, taxes, intangible assets and certain other assets and liabilities
are not allocated to individual segments as they are managed on a group basis. The undertakings of our associate entity are distinct
from the operating activities of the Group and therefore the Group’s share of associate’s profits is managed on a group basis (previously
allocated to the investment and asset management segment).
Reconciliation of profit before tax
Total segments
Deferred consideration as remuneration
Acquisition-related costs
Depreciation
Irrecoverable VAT
Professional indemnity insurance
Finance costs
Amortisation and impairment
Bank charges
Foreign exchange loss
Gain on bargain purchase
Profit/(loss) on disposal of property, plant and equipment
Finance income
Share of profit from associate, net of tax
Group profit before tax
2022
£000
2021
£000
26,328
15,201
(9,664)
(3,408)
(2,762)
(1,431)
(1,397)
(1,006)
(331)
(36)
–
–
3
79
1,614
7,989
(3,803)
(2,595)
(2,772)
(981)
(706)
(258)
(304)
(48)
(3)
288
(46)
34
1,141
5,148
Country-by-country reporting
HM Treasury has transposed the requirements set out under the Capital Requirements Directive IV (“CRD IV”) and issued the Capital
Requirements Country-by-Country Reporting Regulations 2013, effective 1 January 2014. The legislation requires Mattioli Woods plc
(together with its subsidiaries) to publish certain additional information split by country, on a consolidated basis, for the year ended
31 May 2022.
Mattioli Woods plc and its subsidiaries (see Note 18) are all incorporated in and operate from the United Kingdom. All employees
(see Note 11) of the Group hold contracts of employment in the United Kingdom. All turnover (revenue) and profit before tax is recognised
on activities based in the United Kingdom. All tax paid and any subsidies received are paid to and received from UK institutions.
7. Auditor’s remuneration
Remuneration paid by the Group to its current auditor, Moore Kingston Smith LLP (2021: Deloitte LLP), for the audit of the financial
statements, fees other than for the audit of the financial statements and the total of non-audit fees for the Group were as follows:
Audit services:
Audit of the financial statements of the Company
Audit of the financial statements of subsidiaries
Audit-related services:
Other assurance – CASS reporting
Interim review
Non-audit services:
Provision of indirect tax software for clients’ VAT returns
8. Finance revenue
Bank interest receivable
Other interest receivable
Unwinding of discount on finance lease receivable
Dividend income
Moore Kingston
Smith LLP
£000
Deloitte LLP
£000
110
130
240
10
–
10
–
–
250
–
–
–
–
40
40
–
–
40
2022
£000
110
130
240
10
40
50
–
–
290
2022
£000
31
14
31
3
79
2021
£000
225
37
262
20
28
48
19
19
329
2021
£000
20
–
14
–
34
Mattioli Woods plc Annual Report 2022F
9. Finance costs
Unwinding of discount on provisions (Note 26)
Unwinding of discount on lease liabilities
Interest payable
10. Operating profit
Included in operating profit before financing:
Depreciation and impairment of tangible assets (Note 15)
Depreciation and impairment of right of use assets (Note 16)
Amortisation and impairment of intangible assets (Note 17)
11. Employee benefits expense
The average monthly number of employees during the year was:
Executive Directors
Non-Executive Directors
Consultants
Administrators
Support staff
Staff costs for the above persons were:
Wages and salaries
Social security costs
Pension costs and life insurance
Other staff costs
S
G
101
2022
£000
904
96
6
1,006
2021
£000
145
110
3
258
2022
£000
(1,625)
(1,137)
(7,546)
2021
£000
(1,638)
(967)
(3,078)
Group
2022
No.
4
5
169
271
351
800
Group
2022
£000
51,164
4,988
1,976
1,443
59,571
Company
2022
No.
Group
2021
No.
Company
2021
No.
4
5
127
225
248
609
2
4
133
251
246
636
2
4
116
221
220
563
Company
2022
£000
32,261
3,646
1,388
1,360
Group
2021
£000
28,817
3,118
1,402
804
Company
2021
£000
25,220
2,650
1,202
776
38,655
34,141
29,848
In addition, the cost of share-based payments disclosed separately in the consolidated statement of comprehensive income was
£1,729,000 (2021: £1,475,000), and the cost of contingent consideration treated as remuneration disclosed separately in the
consolidated statement of comprehensive income was £9,664,000 (2021: £3,803,000).
Details of the remuneration payable to each Director in respect of the year ended 31 May 2022 are disclosed in the Directors’
remuneration report on page 61.
Emoluments
Benefits in kind
Market value of share options vesting
2022
£000
3,008
12
504
3,524
2021
£000
1,707
17
636
2,360
Four Directors (2021: five) accrued benefits under personal pension schemes, or through an equivalent cash award when they have
reached their maximum lifetime allowance. During the year 235,000 share options were issued to Directors (2021: 20,000) and Directors
exercised 203,016 share options (2021: 64,740). The aggregate amount of gains made by Directors on the exercise of share options
during the year was £1,629,000 (2021: £433,000). For terms of share options awarded, please see Note 20.
Mattioli Woods plc Annual Report 2022F
102
Notes to the financial statements continued
11. Employee benefits expense continued
The amounts in respect of the highest paid Director are as follows:
Emoluments
Benefits in kind
Market value of share options vesting
2022
£000
1,276
4
481
1,761
2021
£000
1,026
9
433
1,468
The amount of gains made by the highest paid Director on the exercise of share options during the year was £1,605,000 (2021: £nil).
The Group makes discretionary and contractual payments into the personal defined contribution pension schemes of employees
and contributions are charged in the statement of comprehensive income as they become payable. The charge for the year was
£1,440,000 (2021: £1,114,000).
12. Income tax
The major components of income tax expense for the years ended 31 May 2022 and 2021 are:
Consolidated statement of comprehensive income
Current tax
Under provision in prior periods
Deferred tax credit
Adjustments in respect of change in tax rate
Adjustments in respect of prior periods
Income tax expense reported in the statement of comprehensive income
2022
£000
5,092
6
5,098
(1,132)
(161)
65
3,870
2021
£000
2,390
38
2,428
(498)
1,974
(147)
3,757
The over provision for current tax in prior periods includes £118,000 (2021: £98,000) arising from a Research and Development tax
credit in respect of the financial year ending 31 May 2021 (2021: Nil).
For the year ended 31 May 2022 the current tax credit on the Group’s share-based payment arrangements recognised directly in equity
was £141,000 (2021: £31,000). The deferred tax charged on the Group’s outstanding share-based payment arrangements recognised
directly in equity was £13,000 (2021: £46,000).
Factors affecting the tax charge for the period
The tax charge assessed for the period is higher (2021: higher) than the standard rate of corporation tax in the UK of 19.0% (2021: 19.0%).
The differences are explained below:
Accounting profit before income tax
Multiplied by standard rate of UK corporation tax of 19.0% (2021: 19.0%)
Effects of:
Expenses not deductible for tax
Effects of changes in tax rates
Deferred tax on share options
Income not taxable
Under/(over) provision in prior periods
Tax reliefs
Income tax expense for the year
Effective income tax rate
2022
£000
7,989
2021
£000
5,148
1,518
978
2,767
(161)
(6)
(307)
71
(12)
3,870
49.1%
1,180
1,974
7
(271)
(108)
(1)
3,757
73.0%
Mattioli Woods plc Annual Report 2022F
S
G
103
Group
2022
£000
Company
2022
£000
Group
2021
£000
Company
2021
£000
(27,324)
(150)
(27,474)
(6,327)
(25)
(6,352)
(9,291)
(151)
(9,442)
(6,730)
(10)
(6,740)
316
460
776
291
460
751
372
579
951
353
578
932
(26,698)
(5,601)
(8,491)
(5,808)
12. Income tax continued
Deferred income tax
Deferred income tax at 31 May relates to the following:
Deferred income tax liability
Temporary differences on:
Acquired intangibles
Accelerated capital allowances
Deferred tax liability
Deferred income tax asset
Temporary differences on:
Provisions
Share-based payments
Deferred tax asset
Net deferred tax liability
Changes to the future expected UK corporation tax rates were enacted as part of The Finance (No. 2) Act 2021 which received Royal
Assent on 10 June 2021, in which the Government announced that the corporation tax main rate will remain at 19% for the years starting
1 April 2021 and 2022 before increasing to 25% for the year starting 1 April 2023 and thereafter. Deferred taxation assets and liabilities
have been remeasured at the blended average rates at which they are expected to unwind.
The primary components of the entity’s recognised deferred tax assets include temporary differences related to share-based payments,
provisions and other items. The primary components of the entity’s deferred tax liabilities include temporary differences related to
property, plant and equipment and intangible assets. The utilisation of the deferred tax asset is dependent on future taxable profits in
excess of the profits arising from the reversal of existing taxable temporary differences.
The recognition of deferred tax in the statement of comprehensive income arises from the origination and the reversal of temporary
differences and the effects of changes in tax rates. The total deferred tax movement in the statement of financial position is summarised
as follows:
Deferred tax reconciliation
Opening net deferred tax liability
Credit/(debit) recognised in statement of comprehensive income
Deferred tax charge recognised in equity
Movement arising from transfer of trade
Deferred tax arising on acquisitions or disposal of trade
Closing net deferred tax liability
2022
£000
(8,491)
1,228
(13)
–
(19,422)
(26,698)
2021
£000
(3,594)
(1,329)
(78)
(102)
(3,388)
(8,491)
There are no income tax consequences for the Group attaching to the payment of dividends by Mattioli Woods plc to its shareholders
in either 2021 or 2022.
Impact of future tax changes
On 10 June 2021 The Finance (No. 2) Bill 2019-21 received Royal Assent, enacting proposals that were announced in the 2021 budget.
The main rate of corporation tax will remain at 19% for the years starting 1 April 2021 and 2022 before increasing to 25% for the year
starting 1 April 2023 and thereafter.
Deferred taxation assets and liabilities have been revalued taking into account the upcoming change in corporation tax rates.
Mattioli Woods plc Annual Report 2022F
104
Notes to the financial statements continued
13. Earnings per ordinary share
Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the Company
by the weighted average number of ordinary shares outstanding during the year, excluding own shares of 76,578 (2021: 76,578).
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the Company by
the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that
would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
The income and share data used in the basic and diluted earnings per share computations is as follows:
Net profit and diluted net profit attributable to equity holders of the Company
Weighted average number of ordinary shares:
Issued ordinary shares at start of period
Effect of shares issued during the year ended 31 May 2021
Basic weighted average number of shares
Effect of dilutive options at the statement of financial position date
Diluted weighted average number of shares
Earnings per ordinary share:
Basic (pence)
Diluted (pence)
2022
£000
4,100
2021
£000
1,419
000s
000s
28,151
21,142
49,393
81
26,940
996
27,936
73
49,474
28,009
8.3
8.3
5.1
5.1
The Company has granted options under the Share Option Plan, the Consultants’ Share Option Plan and the LTIP to certain of its senior
managers and Directors to acquire (in aggregate) up to 2.06% of its issued share capital (see Note 20). Under IAS 33 ‘Earnings Per Share’,
contingently issuable ordinary shares are treated as outstanding and are included in the calculation of diluted earnings per share if the
conditions (the events triggering the vesting of the option) are satisfied. At 31 May 2022 the conditions attached to 970,100 options
granted under the LTIP were not satisfied (2021: 702,238). If the conditions had been satisfied, diluted earnings per share would have
been 8.1p per share (2021: 4.9p).
Since the reporting date and the date of completion of these financial statements the following transactions have taken place involving
ordinary shares or potential ordinary shares:
• The issue of 45,252 ordinary shares under the Mattioli Woods plc Share Incentive Plan; and
• The issue of 3,258 ordinary shares to satisfy the exercise of share options under the LTIP.
14. Dividends paid and proposed
Declared and paid during the year:
Equity dividends on ordinary shares:
– Final dividend for 2021: 13.5p (2020: 12.7p)
– Interim dividend for 2022: 8.3p (2021: 7.5p)
Dividends paid
Proposed for approval by shareholders at the AGM:
Final dividend for 2022: 17.8p (2021: 13.5p)
2022
£000
2021
£000
6,818
4,223
11,041
3,547
2,103
5,650
9,079
6,818
Mattioli Woods plc Annual Report 2022F
S
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105
Land and
buildings
£000
Computer
and office
equipment
£000
Fixtures
and fittings
£000
Motor
vehicles
£000
10,780
–
–
–
10,780
–
–
–
10,780
420
252
–
672
199
–
871
9,909
10,108
10,360
2,654
93
130
(770)
2,107
247
426
–
5,676
18
3
(725)
4,972
181
95
–
1,631
307
–
(467)
1,471
573
–
(257)
Total
£000
20,741
418
133
(1,962)
19,330
1,001
521
(257)
2,780
5,248
1,787
20,595
1,823
327
(758)
1,392
361
–
1,753
1,027
714
831
2,207
825
(705)
2,327
831
–
3,158
653
234
(288)
599
232
(141)
687
5,103
1,638
(1,751)
4,990
1,623
(141)
6,469
2,090
2,646
3,469
1,100
872
978
14,126
14,340
15,638
Computer
and office
equipment
£000
Fixtures
and fittings
£000
Motor
vehicles
£000
2,499
92
(770)
68
1,889
221
–
2,110
1,672
274
(752)
1,194
244
–
1,438
2,745
17
(724)
7
2,044
165
–
2,209
1,433
401
(696)
1,138
388
–
1,526
1,636
307
(467)
–
1,476
573
(257)
1,792
661
234
(289)
606
232
(144)
694
672
695
827
683
906
1,312
1,098
870
976
Total
£000
6,880
416
(1,961)
75
5,410
959
(257)
6,111
3,766
909
(1,737)
2,938
864
(144)
3,658
2,453
2,472
3,115
15. Property, plant and equipment
Group
Gross carrying amount:
At 1 June 2020
Additions
Arising on acquisitions
Disposals
At 31 May 2021
Additions
Arising on acquisitions
Disposals
At 31 May 2022
Depreciation:
At 1 June 2020
Charged for the year
On disposals
At 31 May 2021
Charged for the year
On disposals
At 31 May 2022
Carrying amount:
At 31 May 2022
At 31 May 2021
At 31 May 2020
Company
Gross carrying amount:
At 1 June 2020
Additions
Disposals
Transfer between companies
At 31 May 2021
Additions
Disposals
At 31 May 2022
Depreciation:
At 1 June 2020
Charged for the year
On disposals
At 31 May 2021
Charged for the year
On disposals
At 31 May 2022
Carrying amount:
At 31 May 2022
At 31 May 2021
At 31 May 2020
Mattioli Woods plc Annual Report 2022F
106
Notes to the financial statements continued
16. Right of use assets
Group
Gross carrying amount:
At 1 June 2020
Additions
Arising on acquisitions
Disposals
At 31 May 2021
Arising on acquisitions
Changes in value
At 31 May 2022
Depreciation:
At 1 June 2020
Charged for the period
On disposals
Impairment
At 31 May 2021
Charged for the period
At 31 May 2022
Carrying amount:
At 31 May 2022
At 31 May 2021
At 31 May 2020
Company
Gross carrying amount:
At 1 June 2020
Additions
Transfer between companies
At 31 May 2021
Changes in value
At 31 May 2022
Depreciation:
At 1 June 2020
Charged for the period
Impairment
At 31 May 2021
Charged for the period
At 31 May 2022
Carrying amount:
At 31 May 2022
At 31 May 2021
At 31 May 2020
Computer
and office
equipment
£000
Properties
£000
2,706
64
689
(75)
3,384
2,344
(65)
5,663
650
734
(52)
167
1,499
904
2,403
3,260
1,885
2,056
717
–
–
–
717
–
–
717
189
233
–
–
422
233
655
62
295
528
Computer
and office
equipment
£000
Properties
£000
2,223
64
532
(46)
2,773
563
561
167
1,291
478
1,769
1,004
1,528
1,660
717
–
–
–
717
189
233
–
422
233
655
62
295
528
Total
£000
3,423
64
689
(75)
4,101
2,344
(65)
6,380
839
967
(52)
167
1,921
1,137
3,058
3,322
2,180
2,584
Total
£000
2,940
64
532
(46)
3,490
752
794
167
1,713
717
2,424
1,066
1,823
2,188
Mattioli Woods plc Annual Report 2022F
S
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107
Internally
generated
software
£000
Software
£000
Client
portfolios
£000
Brand
£000
Goodwill
£000
Other
£000
Total
£000
1,746
–
386
2,132
–
427
–
1,927
–
4
1,931
–
–
–
39,256
18,293
–
57,549
77,144
1,261
–
–
–
–
–
1,951
–
–
10,426
7,470
–
17,896
65,620
–
–
35
–
–
35
–
–
(35)
53,390
25,763
390
79,543
144,715
1,688
(35)
2,559
1,931
135,954
1,951
83,516
–
225,911
884
187
1,071
219
–
1,290
1,269
1,061
862
1,209
117
1,326
112
–
1,438
493
605
718
13,869
2,774
16,643
7,126
–
23,769
–
–
–
89
–
89
112,185
1,862
–
–
–
–
–
–
–
–
35
–
35
–
(35)
15,997
3,078
19,075
7,546
(35)
–
26,586
83,516
17,896
10,426
–
–
–
199,325
60,468
37,393
40,906
25,387
Internally
generated
software
£000
1,745
–
–
387
2,132
427
Software
£000
Client
portfolios
£000
Goodwill
£000
Total
£000
1,768
–
–
–
1,768
–
28,979
537
13,065
–
42,581
–
16,384
–
12,132
–
28,516
–
48,876
537
25,197
387
74,997
427
2,559
1,768
42,581
28,516
75,424
884
187
1,071
219
1,290
1,269
1,061
861
1,099
114
1,213
101
1,314
10,255
1,903
12,158
2,643
14,801
–
–
–
–
–
12,238
2,204
14,442
2,963
17,405
454
555
669
27,780
30,423
18,724
28,516
28,516
16,384
58,019
60,555
36,638
17. Intangible assets
Group
Gross carrying amount:
At 1 June 2020
Arising on acquisitions
Additions
At 31 May 2021
Arising on acquisitions
Additions
Disposals
At 31 May 2022
Amortisation and impairment:
At 1 June 2020
Charged for the period
At 31 May 2021
Charged for the period
Disposals
At 31 May 2022
Carrying amount:
At 31 May 2022
At 31 May 2021
At 31 May 2020
Company
Gross carrying amount:
At 1 June 2020
Arising on acquisitions
Arising on hive up
Additions
At 31 May 2021
Additions
At 31 May 2022
Amortisation and impairment:
At 1 June 2020
Charged for the period
At 31 May 2021
Charged for the period
At 31 May 2022
Carrying amount:
At 31 May 2022
At 31 May 2021
At 31 May 2020
Mattioli Woods plc Annual Report 2022F
108
Notes to the financial statements continued
17. Intangible assets continued
Software
Software is amortised over its useful economic life of four years on a reducing balance basis. Internally generated software represents
the development costs of the Group’s bespoke customer relationship management, administration and trading platform. The Directors
believe this technology will be the principal technology platform used throughout the Group for the foreseeable future. Internally
generated software is amortised on a straight-line basis over an estimated useful life of 10 years.
Client portfolios
Client portfolios represent individual client portfolios acquired through business combinations. Client portfolios are amortised
on a straight-line basis over an estimated useful life of between 10 and 25 years, based on the Group’s historic experience.
Goodwill
Goodwill arises where the price paid for an acquisition is greater than the fair value of the net assets acquired. Goodwill arising
on business combinations is subject to annual impairment testing (see Note 19).
18. Investments
Details of the investments in related entities, comprising subsidiaries, associates and other significant holdings which the Group holds
20% or more of the nominal value of any class of share capital, are included in the appendices to the Annual Report and Accounts
on page 128.
Investments in subsidiaries
At 1 June 2020
Investment in Hurley Partners Limited
Investment in Montagu Limited
Investment in Pole Arnold Financial Management Limited
Investment in Caledonia Asset Management Limited
Reduction in value of Broughtons Financial Planning Limited
At 31 May 2021
Investment in Maven Capital Partners UK LLP
Investment in Richings Financial Management Limited
Investment in LWMG Topco Limited
Reduction in value of Hurley Partners Limited
Reduction in value of Broughtons Financial Planning Limited
Strike-off of other dormant subsidiaries
At 31 May 2022
Company
£000
13,141
17,417
3,228
4,402
1,638
(21)
39,805
89,370
1,567
28,550
(17,417)
(4,326)
(41)
137,508
Reduction in value of investments in Broughtons Financial Planning Limited (“Broughtons”) and Hurley Partners Limited (“Hurley”)
investments were recognised following their dividend in specie, settled by the partial waiver of loan notes due to them from Mattioli Woods.
Subsequently, the Company’s investments in Broughtons and Hurley were written down to £nil. The impairment charge recognised by the
Company of £21,743,000 was eliminated on consolidation.
Investment in associate
The Group holds 49% of the ordinary share capital of Amati Global Investors Limited (“Amati”), with the remaining 51% of the ordinary
share capital held by Amati Global Partners LLP.
Amati is an independent specialist fund management business managing funds investing in small and mid-sized companies. Amati’s
gross assets under management at 31 May 2022 was £1,208m (2021: £1,308m) comprising; Amati AIM VCT plc, Amati AIM IHT Portfolio
Service, TB Amati UK Smaller Companies Fund, TB Amati Strategic Metals Fund and TB Amati Strategic Innovation Fund.
The Group exercises significant influence by virtue of its contractual right to appoint a minority of directors to Amati’s board of directors.
The Group has no other rights which would allow it to exercise control over Amati’s operations. Therefore, the Group is not judged to
control Amati and it is not consolidated.
Mattioli Woods plc Annual Report 2022F
18. Investments continued
Investment in associate continued
The movement in the Group’s investment in associate is as follows:
Group and Company
At 1 June
Share of profit for the year
Amortisation of fair value intangibles
Share of other comprehensive income
Dividends received from associate
At 31 May
Share of profit from associate in statement of comprehensive income
Share of profit for the year
Amortisation of fair value intangibles
Elimination of transactions with associate
S
G
109
2022
£000
4,295
1,672
(68)
(19)
(1,715)
4,165
2022
£000
1,672
(68)
10
1,614
2021
£000
3,732
1,191
(68)
28
(588)
4,295
2021
£000
1,191
(68)
18
1,141
Other comprehensive income represents the Company’s share of revaluation gains and losses on financial assets designated as fair value
through profit and loss by Amati.
The results of Amati and its aggregated assets and liabilities as at 31 May 2022 are as follows:
Name
Amati Global Investors Limited
Group’s share of profit
Country of
incorporation
Assets
£000
Liabilities
£000
Revenue
£000
Scotland
6,420
2,831
13,246
Profit
£000
3,373
1,672
Interest
held
49%
The net assets of Amati as at 1 June 2021 were £3,589,000. At 31 May 2022 the net assets of Amati were £3,462,000 following payment
of dividends of £3,500,000 and other increases in net assets of £3,373,000, increasing the Group’s interest in the associate (net of tax)
by £1,653,000 during the year, comprising Mattioli Woods’ share of Amati’s profit after tax recognised in the statement of comprehensive
income and Mattioli Woods’ share of the movement in Amati’s revaluation reserve recognised directly in equity.
Other fixed asset investments
At 1 June 2020
Additions
Disposals
At 31 May 2021
Arising on acquisition of Maven
Additions
Disposals
Revaluation
At 31 May 2022
Listed investments 2022
Unlisted investments 2022
At 31 May 2022
Current 2022
Non-current 2022
At 31 May 2022
Current 2021
Non-current 2021
At 31 May 2021
Group
£000
40
500
(14)
526
3,909
1,574
(279)
32
5,762
2,991
2,771
5,762
253
5,509
5,762
26
500
526
Company
£000
40
500
(14)
526
–
1,000
–
–
1,526
–
1,526
1,526
–
1,526
1,526
26
500
526
On 29 September 2021 the Company increased its investment in Tiller Group Limited (“Tiller”) as part of a new strategic relationship
to develop a digital, self-investment application. The investment sees the Company increase its shareholding to 9.9%, through a
subscription of new shares in Tiller.
Mattioli Woods plc Annual Report 2022F
110
Notes to the financial statements continued
18. Investments continued
Other fixed asset investments continued
Tiller provides a Software as a Service wealth management platform designed specifically for wealth managers and other regulated
financial services businesses. We will work closely with Tiller to develop its market-leading, automated investment management
platform that will extend our discretionary investment management services to a new range of clients.
At 31 May 2022, the Company owned 9.40% (2021: 9.40%) of the shareholding in MW Properties (No.25) Limited (“MWPS25”), acquired
at a total cost of £91,000. At 31 May 2022, these shares are included within investments at a value of £26,000 (2021: £26,000).
Other fixed asset investments held by the Group of £4,235,000 at 31 May 2022 include the following:
• Listed investments valued at £2,991,000 (2021: £nil) predominantly comprising Maven’s holding of shares in the four listed VCTs for
which Maven acts as fund manager (Maven Income and Growth VCT PLC, Maven Income and Growth VCT 3 PLC, Maven Income
and Growth VCT 4 PLC, Maven Income and Growth VCT 5 PLC); and
• Unlisted investments valued at £1,244,000 (2021: £nil) predominantly comprising Maven’s holdings of its seven regional funds.
19. Impairment of goodwill and client portfolio intangible assets
Goodwill and client portfolio intangible assets arising on acquisitions are allocated to the cash-generating units comprising the
acquired businesses. Allocation to cash-generating units is based on headcount or revenues at the date of acquisition. Where the Group
reorganises its operating and reporting structures in a way that changes the composition of one or more cash-generating units to which
goodwill and client portfolio assets have been allocated, the goodwill and client portfolio assets are reallocated to the units affected.
The cash-generating units comprise the same groups of assets as the four operating segments, which represent the smallest individual
groups of assets generating cash flows. Goodwill and client portfolio assets have been allocated between the Group’s operating
segments for impairment testing, as follows:
Group
At 1 June 2020
Arising on acquisitions
Amortisation during the year
At 31 May 2021
Arising on acquisitions
Additions
Amortisation during the year
At 31 May 2022
Goodwill
Client portfolios
Brand
At 31 May 2022
Company
At 1 June 2020
Arising on acquisitions
Transferred to the Company
Amortisation during the year
At 31 May 2021
Amortisation during the year
At 31 May 2022
Goodwill
Client portfolios
At 31 May 2022
Pension
consultancy
Investment
and asset
Private
equity asset
Property
and admin management management management
£000
£000
£000
£000
Employee
benefits
£000
Total
£000
263
5,460
35,813
14,125
15,965
2,166
(933)
23,060
(1,437)
15,358
37,588
–
–
–
–
–
–
(948)
48,494
1,261
(2,684)
96,221
–
(3,107)
14,410
84,659
93,114
5,489
8,921
–
37,414
47,245
–
14,410
84,659
39,787
51,465
1,862
93,114
537
(8)
792
–
–
(80)
712
188
524
–
712
–
(396)
25,763
(2,774)
5,064
58,802
–
–
(396)
144,715
1,261
(7,215)
4,668
197,563
638
4,030
–
83,516
112,185
1,862
4,668
197,563
Employee
benefits
£000
Total
£000
Pension
consultancy
Investment
Property
and asset
and admin management management
£000
£000
£000
10,162
16,204
263
8,479
35,108
–
2,834
(656)
–
22,363
(842)
12,340
37,725
(728)
11,612
(1,439)
36,286
6,211
5,401
18,461
17,825
11,612
36,286
537
–
(8)
792
(80)
712
188
524
712
–
–
(397)
537
25,197
(1,903)
8,082
58,939
(396)
7,686
(2,643)
56,296
3,656
4,030
7,686
28,516
27,780
56,296
Mattioli Woods plc Annual Report 2022F
S
G
111
19. Impairment of goodwill and client portfolio intangible assets continued
The determination of whether goodwill and client portfolio assets are impaired requires an assessment of the fair value less cost to sell
and estimation of the value in use of the operating segments to which the assets have been allocated. We have assessed both the value
in use of the operating segments and fair value less costs to sell, based on the enterprise value of the Group at the year-end date, and
determined that the value in use is higher than the enterprise value.
In assessing value in use, the estimated future cash flows of each operating segment are discounted to their present value using a pre-
tax discount rate of 9.8% (2021: 10.5%), reflecting current market assessments of the time value of money and the risks specific to these
assets, based on the Group’s WACC. The key assumptions used in respect of value in use calculations are those regarding growth rates
and anticipated changes to revenues and costs during the period covered by the calculations, based upon management’s expectation.
The estimated cash flows for each segment are derived from the budget for the three years to 31 May 2025, extrapolated for a further
two years assuming medium-term growth of 5.0% (2021: 5.0%) and a long-term growth rate of 2.0% (2021: 2.0%), which management
considers conservative against actual average long-term growth rates.
The value in use calculated at 31 May 2022 was £548.7m. Comparing this to the net asset value of the operating segments identified
above, the Directors believe the value of goodwill is not impaired at 31 May 2022. This accounting treatment resulted in an impairment
loss of £nil (2021: £nil).
Discount rate sensitivity of +1.0% represents a plausible variance in discount rate as a result of a range of judgements used in following
the capital asset pricing model to determine an appropriate weighted average cost of capital for the Group. Growth rate sensitivities
are set at a level to either minimise or altogether remove the impact of assumed growth in pre-tax cash flows derived from each
operating segment.
The sensitivity of the value in use calculated at 31 May 2022 to changes in the key assumptions is as follows:
Assumption
Discount rate
Years 1-3 cash flows
Medium-term growth rate
Long-term growth rate
Base assumption
Change in
assumption
Increase/
(decrease)
in value in use
£m
9.8%
Var.
5.0%
2.0%
+1.0%
–5.0%
–5.0%
–2.0%
(66.3)
(24.8)
(43.3)
(112.3)
None of these individual sensitivities would result in an impairment in the value in use of any operating segment.
20. Share-based payments
Share-based payments expense
The amounts recognised in the statement of comprehensive income in respect of share-based payments were as follows:
Group and Company
Long-Term Incentive Plan
Share Incentive Plan
Total
2022
2021
Equity-settled Equity-settled
£000
£000
1,414
315
1,729
1,149
326
1,475
The share-based payment expense in respect of the LTIP for the year ended 31 May 2021 included the impact of the modification
of the performance period of the 4 September 2019 Tranche B LTIP awards.
Long-Term Incentive Plan
During the year, Mattioli Woods granted awards to the Company’s executive Directors and certain senior employees under the Long-
Term Incentive Plan (“LTIP”). Conditional share awards (“Equity-settled”) grant participating employees a conditional right to become
entitled to options with an exercise price of 1 pence over ordinary shares in the Company. Conditional cash awards (“Cash-settled”)
grant participating employees a conditional right to be paid a cash amount based on the proceeds of the sale of a specified number of
ordinary shares following the vesting of the award. Movements in the LTIP scheme during the period were as follows:
LTIP options
Outstanding as at 1 June
Granted during the year
Exercised during the year
Forfeited during the year
Outstanding at 31 May
Exercisable at 31 May
2022
2021
Equity-settled Equity-settled
No.
No.
933,809
488,000
(353,182)
(17,500)
889,504
255,800
(207,295)
(4,200)
1,051,127
933,809
81,027
235,571
The LTIP awards are subject to the achievement of corporate profitability targets measured over a three to five-year performance period
and will vest following publication of the Group’s audited results for the final performance year.
The amounts shown above represent the maximum opportunity for the participants in the LTIP.
Mattioli Woods plc Annual Report 2022F
112
Notes to the financial statements continued
20. Share-based payments continued
Long-Term Incentive Plan continued
Date of grant
15 October 2015
6 September 2016
5 September 2017
6 September 2018
4 September 2019 – Tranche A
4 September 2019 – Tranche B
1 June 2020 – Tranche A
1 June 2020 – Tranche B
24 December 2021 – Tranche A
24 December 2021 – Tranche B
Exercise
price
£0.01
£0.01
£0.01
£0.01
£0.01
£0.01
£0.01
£0.01
£0.01
£0.01
Granted
during
the period
No.
2021
No.
Forfeited
during
the period
No.
Exercised
during
the period
No.
39,864
120,172
75,535
198,638
108,000
139,800
137,550
114,250
–
–
–
–
–
–
–
–
–
–
144,400
343,600
–
–
–
–
(10,000)
–
(5,000)
(2,500)
–
–
(39,554)
(84,513)
(66,177)
(162,938)
–
–
–
–
–
–
2022
No.
310
35,659
9,358
35,700
98,000
139,800
132,550
111,750
144,400
343,600
933,809
488,000
(17,500)
(353,182) 1,051,127
The weighted average share price at the date of exercise for share options exercised during the year was £8.43 (2021: £6.71). For the
share options outstanding at 31 May 2022, the weighted average exercise price (“WAEP”) was £0.01 (2021: £0.01), and the weighted
average remaining contractual life is 2.20 years (2021: 1.46 years).
As a result of the exercise of 353,182 (2021: 207,295) share options during the year, the cumulative cost recognised in equity share-based
payment reserve in respect of these options was transferred to retained earnings, increasing retained earnings by £2,175,000 (2021:
£1,354,000).
Income tax and employee’s National Insurance contributions payable by the participant on exercise of a share option are borne by
the participant, employer’s National Insurance contributions payable on exercise are borne by the Company and provided for over the
vesting period (Note 26).
Valuation assumptions
The fair value of equity-settled share options granted is estimated as at the date of grant using the Black Scholes Merton model, taking
into account the terms and conditions upon which the options were granted. The following table lists the inputs to the model used to
estimate the fair value of options granted during the year ended 31 May 2022:
Date of grant
Share price at date of grant
Option exercise price
Expected life of option (years)
Expected share price volatility (%)
Dividend yield (%)
Risk-free interest rate (%)
Tranche A
Tranche B
24 December 2021
£8.70
£0.01
6.5
25.0
2.66
0.78
24 December 2021
£8.70
£0.01
4.5
25.0
2.66
0.74
The expected volatility assumption is based on statistical analysis of the historical volatility of the Company’s share price.
The share price at 31 May 2022 and movements during the year are set out in the Directors’ remuneration report.
Share Incentive Plan
The Company operates the Mattioli Woods plc Share Incentive Plan (“the SIP”). Participants in the SIP are entitled to purchase, at
market value, up to a prescribed number of new 1p ordinary shares in the Company each year for which they will receive a like for like
conditional ‘matching share’, subject to their continued employment for the three years following award of the matching share. These
ordinary shares rank pari passu with existing issued ordinary shares of the Company. Movements in the shares held in the SIP on behalf
of employees during the year were as follows:
SIP shares
Scheme shares as at 1 June
Employee shares purchased
Matching shares awarded
Matching shares recycled
Reinvestment of dividends
Shares transferred out
Scheme shares at 31 May
Conditional matching shares at 31 May
A total of 467 (2021: 389) employees participated in the SIP during the year.
2022
No.
2021
No.
701,259
64,186
64,186
(8,006)
19,240
(57,500)
599,662
58,753
58,753
(3,376)
19,364
(31,896)
783,365
701,259
149,667
144,483
Mattioli Woods plc Annual Report 2022F
S
G
113
21. Trade and other receivables (current)
Trade receivables due from Group companies
Other trade receivables
Other receivables
Prepayments and accrued income
Group
2022
£000
–
11,000
2,072
15,374
Company
2022
£000
35,787
4,069
343
10,684
28,446
50,883
Group
2021
£000
–
5,184
2,625
11,388
19,197
Company
2021
£000
13,093
3,801
1,447
9,906
28,247
Trade receivables due from Group companies are recognised at amortised cost, eliminate on consolidation, and include £12.1m
(2021: £12.6m) receivable from subsidiary Mattioli Woods (New Walk) Limited on which interest is incurred at the Bank of England’s
base rate plus a margin of 3% and £16.3m (2021: £nil) receivable from subsidiary LWMG Midco Limited on which interest is incurred at
the Bank of England’s base rate plus a margin of 3.5%. All other balances due from Group companies incur no interest and are due on
demand. None of the trade receivables from Group companies were overdue at the reporting date, and no provisions for impairment
of receivables from Group companies are required on review.
Other trade receivables are non-interest bearing and are generally on 30-90 days’ terms. As at 31 May 2022, the nominal value of
non-related party trade receivables impaired and fully provided for, and movements in the lifetime loss provision for impairment
(with no 12-month expected credit losses or transfers between stages) of receivables were as follows:
As at 1 June
Charge for year
Utilised during the year
Acquired on acquisition
At 31 May
Group
2022
£000
1,412
258
(195)
71
1,936
Company
2022
£000
1,208
61
(129)
–
1,140
Group
2021
£000
1,753
25
(366)
–
1,412
Company
2021
£000
1,346
50
(188)
–
1,208
At 31 May 2022, the analysis of non-related party trade receivables that were past due but not impaired is as follows:
Gross carrying amount
Provisions for ECL
At 31 May 2022
Gross carrying amount
Provisions for ECL
At 31 May 2021
Neither past
due nor
impaired
£000
4,079
(100)
3,979
2,213
(98)
2,115
Total
£000
12,936
(1,936)
11,000
6,596
(1,412)
5,184
Past due but not impaired
< 30 days
£000
30-60 days
£000
60-90 days
£000
>90 days
£000
2,649
(99)
2,550
1,837
(69)
1,768
2,022
(24)
1,998
589
(16)
573
395
(14)
381
235
(13)
222
3,791
(1,699)
2,092
1,722
(1,216)
506
Prepayments and accrued income balances include the following contract assets accrued under IFRS 15:
Contract assets accrued
At 1 June 2021
Arising from acquisitions
Net increase/(decrease) in contract assets accrued
At 31 May 2022
Group
£000
Company
£000
11,388
9,906
1,055
18
12,461
–
(1,538)
8,368
For all receivables above, including neither past due nor impaired, the carrying amount is deemed to reflect the fair value.
Mattioli Woods plc Annual Report 2022F
114
Notes to the financial statements continued
22. Cash and short-term deposits
For the purpose of the statement of cash flows, cash and cash equivalents comprise the following at 31 May 2022:
Cash at banks and in hand
Cash and cash equivalents
Group
2022
£000
53,912
53,912
Company
2022
£000
25,864
25,864
Group
2021
£000
21,888
21,888
Company
2021
£000
10,909
10,909
Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of
between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the respective
short-term deposit rates. The fair value of cash and short-term deposits is £53.9m (2021: £21.9m).
23. Issued capital and reserves
Group and Company
Issued and fully paid
At 1 June 2020
Exercise of employee share options
Shares issued under the SIP
Shares issued for consideration
At 31 May 2021
Exercise of employee share options
Shares issued under the SIP
Shares issued under a placing
Shares issued for consideration
At 31 May 2022
Ordinary
shares
of 1p
Share
capital
£000
Share
premium
£000
Merger
reserve
£000
26,939,862
269
32,891
10,639
207,295
133,493
970,409
2
2
10
–
943
–
–
–
6,819
28,251,029
283
33,834
17,458
350,212
139,606
16,969,697
5,325,705
4
1
169
53
–
1,098
108,441
–
–
–
–
39,767
51,036,249
510
143,373
57,225
Rights, preferences and restrictions on shares
All ordinary shares carry equal rights and no privileges are attached to any shares in the Company. All the shares are freely transferable,
except as otherwise provided by law. However:
• The former shareholders of Hurley Partners have entered into lock-in deeds with Mattioli Woods and its nominated adviser and broker,
Canaccord Genuity Limited, restricting sales of that part of the consideration comprising 842,866 ordinary shares in Mattioli Woods
during the two years ending 31 July 2022;
• The former shareholder of Montagu has entered into a lock-in deed with Mattioli Woods and its nominated adviser and broker,
Canaccord Genuity Limited, restricting sales of that part of the consideration comprising 40,161 ordinary shares in Mattioli Woods
during the two years ending 2 February 2023;
• The former shareholders of Pole Arnold Financial Management have entered into lock-in deeds with Mattioli Woods and its
nominated adviser and broker, Canaccord Genuity Limited, restricting sales of that part of the consideration comprising 72,940
ordinary shares in Mattioli Woods during the two years ending 12 April 2023;
• The former shareholders of Caledonia Asset Management have entered into lock-in deeds with Mattioli Woods and its nominated
adviser and broker, Canaccord Genuity Limited, restricting sales of that part of the consideration comprising 12,724 ordinary shares
in Mattioli Woods during the two years ending 16 April 2023;
• The former members of Maven Capital Partners UK LLP have entered into lock-in deeds with Mattioli Woods and its nominated
adviser and broker, Canaccord Genuity Limited, restricting sales of that part of the consideration comprising 4,545,455 ordinary
shares in Mattioli Woods during the four years ending 30 June 2025; and
• The former shareholders of Ludlow Wealth Management Group have entered into lock-in deeds with Mattioli Woods and its
nominated adviser and broker, Canaccord Genuity Limited, restricting sales of that part of the consideration comprising 780,250
ordinary shares in Mattioli Woods during the two years ending 3 September 2023.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share
at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.
Share schemes and Share Incentive Plan
The Company has two share schemes under which options to subscribe for the Company’s shares have been granted to certain
executives and senior employees (Note 20).
The Company also operates a Share Incentive Plan. Participants in the SIP are entitled to purchase up to a prescribed number of new
ordinary shares in the Company in any year. At the Directors’ discretion, the Company may also award additional shares to participants
in the SIP. Ordinary shares issued under the SIP rank pari passu with existing issued ordinary shares of the Company. Dividends paid on
shares held within the SIP are used to buy new ordinary shares in the Company of 1p each.
Mattioli Woods plc Annual Report 2022F
23. Issued capital and reserves continued
Own shares
At 1 June 2020, 31 May 2021 and 31 May 2022
S
G
115
Number Own shares
£000
of shares
76,578
597
Own shares represent the cost of the Company’s own shares, either purchased in the market or issued by the Company, that are held
by the Company or in an employee benefit trust to satisfy future awards under the Group’s share-based payment schemes (Note 20).
At 31 May 2022, 76,578 (2021: 76,578) shares were held in the Mattioli Woods Employee Benefit Trust, representing 0.15% of issued share
capital (2021: 0.27%).
Other reserves
Movements recognised in other reserves in the year are disclosed in the statement of changes in equity. The following table describes
the nature and purpose of each reserve within equity:
Reserve
Share premium
Merger reserve
Description and purpose
Amounts subscribed for share capital in excess of nominal value less any associated issue costs that have
been capitalised.
Where shares are issued as consideration for >90% of the shares in a subsidiary, the excess of the fair value
of the shares acquired over the nominal value of the shares issued is recognised in the merger reserve.
Capital redemption reserve
Amounts transferred from share capital on redemption of issued shares.
Equity – share-based payments
The fair value of equity instruments granted by the Company in respect of share-based payment
transactions less options exercised.
Own shares
The cost of the Company’s own shares, purchased in the market, that are held in an employee benefit trust
to satisfy future awards under the Group’s share-based payment schemes (Note 20).
Retained earnings
All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.
The Company has issued options to subscribe for the Company’s shares under two employee share schemes (Note 20). The cost of
exercised or lapsed share options has been derecognised from equity share-based payments and re-allocated to retained earnings as
required by IFRS 2 ‘Share-based Payments’.
24. Cash flows arising from financing liabilities
The financing liabilities of the Group are £3,757,000 (2021: £2,585,000), comprising lease liabilities as disclosed in Note 27.
Cash flows arising from financing liabilities include payment of lease liabilities of £1,298,000 (2021: £1,077,000).
The financing liabilities of the Company are £1,396,000 (2021: £2,216,000), comprising lease liabilities as disclosed in Note 27.
Cash flows arising from financing liabilities include payment of lease liabilities of £910,000 (2021: £895,000).
The net cash flows from financing activities of the Group and the Company, as reported in the statements of cash flows,
relate entirely to financing balances reported within equity.
25. Trade and other payables
Trade and other payables
Trade payables due to Group companies
Loan notes due to subsidiary undertakings
Other trade payables
Other taxation and social security
Other payables
Accruals and deferred income
Trade and other payables
Current
Non-current
Group
2022
£000
–
–
1,027
2,632
647
20,749
25,055
25,055
–
Company
2022
£000
2,093
–
751
1,902
465
10,278
15,489
15,489
–
Group
2021
£000
–
–
633
2,052
1,197
11,633
15,515
15,515
–
Company
2021
£000
2,064
28,143
697
1,810
1,239
8,841
42,794
14,651
28,143
Trade payables due to Group companies reported by the Company incur no interest, are repayable on demand and eliminate
on consolidation. Terms and conditions of the other financial liabilities set out above are as follows:
• Trade payables are non-interest bearing and are normally settled on 30-day terms;
• Other taxation and social security become interest bearing if paid late and are settled on terms of one or three months; and
• Accruals and deferred income are non-interest bearing and are normally settled monthly throughout the financial year.
Mattioli Woods plc Annual Report 2022F
116
Notes to the financial statements continued
25. Trade and other payables continued
Loan notes due to subsidiary undertakings
On 28 February 2021, the trade and assets of Broughtons Financial Planning Limited and Hurley Partners Limited were transferred
to the Company. The trade and assets were exchanged for loan notes equal to the book value of the assets and assumed liabilities
of Broughtons Financial Planning Limited and Hurley Partners Limited as at the date of hive up, and attracting annual interest on the
outstanding principal at a rate of 3% above the Bank of England base rate.
During the year, interest costs of £924,000 (2021: £218,000) were borne by the Company with £nil (2021: £nil) impact on consolidation.
On 30 May 2022, the loan notes were waived in settlement of in specie distributions totalling £28,849,000 from Broughtons Financial
Planning Limited and Hurley Partners Limited, with £nil carrying value remaining outstanding. This also gave rise to the impairment of
the Company’s investment in these subsidiaries totalling £21,743,000 to £nil carrying value, with £nil impact on consolidation.
26. Financial liabilities and provisions
Group
At 1 June 2020
Unwinding of discount
Arising during the year
Arising on acquisitions
Paid during the year
Unused amounts reversed
Reclassification
At 31 May 2021
Unwinding of discount
Arising during the year
Arising on acquisitions
Paid during the year
Unused amounts reversed
Reclassification
At 31 May 2022
Current 2021
Non-current 2021
At 31 May 2021
Current 2022
Non-current 2022
At 31 May 2022
Contingent
consideration
£000
Contingent
remuneration
£000
Client
claims Dilapidations
£000
£000
Clawbacks
£000
Employer’s
NIC on
share options
£000
Onerous
contracts
£000
1,454
797
1,880
133
–
2,405
(1,111)
–
–
2,881
871
186
7,375
(1,554)
–
(475)
9,284
1,709
1,172
2,881
1,605
7,679
9,284
–
3,803
–
(609)
–
–
3,991
–
9,664
–
(5,905)
–
–
7,750
3,991
–
3,991
7,750
–
7,750
–
568
–
(519)
(19)
450
2,360
–
1,225
–
(209)
(111)
–
3,265
2,358
–
2,358
3,265
–
3,265
377
20
70
138
(18)
(66)
–
521
33
(56)
324
(29)
–
–
793
343
178
521
283
510
793
58
634
–
91
–
(89)
–
–
60
–
16
65
(59)
–
–
82
60
–
60
67
15
82
–
173
–
(193)
–
–
614
–
433
–
(371)
–
–
676
419
195
614
269
407
676
22
–
–
29
(51)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
FSCS levy
£000
109
–
15
–
(15)
–
–
Total
£000
5,331
153
4,720
2,572
(2,605)
(85)
450
109
10,536
–
–
–
–
(109)
–
904
11,468
7,764
(8,127)
(220)
(475)
–
21,850
109
–
109
–
–
–
8,991
1,545
10,536
13,239
8,611
21,850
Mattioli Woods plc Annual Report 2022F
26. Financial liabilities and provisions continued
Company
At 1 June 2020
Contingent
consideration
£000
Contingent
remuneration
£000
Client
claims Dilapidations
£000
£000
Clawbacks
£000
Employer’s
NIC on
share options
£000
Onerous
contracts
£000
1,454
797
1,639
347
54
634
Finance costs
Arising during the year
Arising on acquisitions
Transferred from Group companies
Paid during the year
Unused amounts reversed
Reclassification
At 31 May 2021
Finance costs
Arising during the year
Arising on acquisitions
Paid during the year
Unused amounts reversed
Reclassification
At 31 May 2022
Current 2021
Non-current 2021
At 31 May 2021
Current 2022
Non-current 2022
At 31 May 2022
133
–
2,405
–
(1,111)
–
–
2,881
871
186
6,774
(1,554)
–
(475)
8,683
1,709
1,172
2,881
1,605
7,078
8,683
–
3,803
–
–
(609)
–
–
3,991
–
9,664
–
(5,905)
–
–
7,750
3,991
–
3,991
7,750
–
7,750
–
568
–
–
(503)
(13)
450
19
72
–
87
(4)
–
–
2,141
521
–
1,174
–
(209)
(111)
–
2,995
2,141
–
2,141
2,995
–
2,995
25
(96)
–
(29)
–
–
421
343
178
521
285
136
421
–
88
–
–
(88)
–
–
54
–
4
–
(4)
–
–
54
54
–
54
54
–
54
–
173
–
–
(193)
–
–
614
–
433
–
(371)
–
–
676
419
195
614
269
407
676
S
G
117
FSCS levy
£000
Total
£000
101
5,048
–
15
–
–
(15)
–
–
152
4,718
2,405
94
(2,551)
(13)
450
101
10,303
–
–
–
–
(101)
–
–
101
–
101
–
–
–
896
11,365
6,774
(8,072)
(212)
(475)
20,579
8,758
1,545
10,303
12,958
7,621
20,579
22
–
–
–
7
(29)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Contingent consideration
The Group has entered into certain acquisition agreements that provide for contingent consideration to be paid. Details of these
agreements and the basis of calculation of the net present value of the contingent consideration are summarised in Note 3. The Group
estimates the net present value of the financial liability payable within the next 12 months is £1.6m (2021: £1.7m) and the Group expects
to settle the non-current balance of £7.7m (2021: £1.2m) within the subsequent three-year period.
Contingent remuneration
Certain business acquisitions made by the Group include arrangements for remuneration payable to selling shareholders, which is
contingent upon certain performance conditions including the financial performance of the acquired business in meeting financial
targets and links to continuing employment of management sellers. Details of these agreements and the basis of calculation of the net
present value of the contingent remuneration are summarised in Note 28. The Group estimates remuneration payable within the next
12 months is £10.0m (2021: £6.3m).
Client claims
A provision is recognised for the estimated potential liability when the Group becomes aware of a possible client claim. The value of the
provision recognised is determined based on the nature of the potential liability, the range of possible outcomes, the Group’s historic
experience and any insurance recovery expected. No discount rate is applied to the projected cash flows due to their short-term nature.
Dilapidations
Under the terms of the leases for the Group’s premises, the Group has an obligation to return the properties in a specified condition
at the end of the lease term. The Group provides for the estimated fair value of the cost of any dilapidations.
Clawbacks
The Group receives certain initial commissions on indemnity terms and hence the Group provides for the expected level of clawback,
based on past experience. No discount rate is applied to the projected cash flows due to their short-term nature.
FSCS levy
The arrangements put in place by the Financial Services Compensation Scheme (“FSCS”) to protect depositors and investors from
loss in the event of failure of financial institutions have resulted in significant levies on the industry in recent years.
There is uncertainty over the level of future FSCS levies as they depend on the ultimate cost to the FSCS of industry failures. The
Group contributes to the investment intermediation levy class and accrues levy costs for future levy years when the obligation arises.
A provision of £nil (2021: £0.1m) has been made in these financial statements for FSCS interim levies expected in relation to the year
ending 31 May 2022.
Mattioli Woods plc Annual Report 2022F
118
Notes to the financial statements continued
27. Lease liability
Group
Maturity analysis – Contractual undiscounted cash flows:
Less than one year
One to five years
More than five years
Total undiscounted cash flows
Total lease liabilities
Current
Non-current
Company
Maturity analysis – Contractual undiscounted cash flows:
Less than one year
One to five years
More than five years
Total undiscounted cash flows
Total lease liabilities
Current
Non-current
2022
£000
2021
£000
1,121
2,365
731
4,217
3,757
985
2,772
2022
£000
579
767
177
1,523
1,396
534
862
989
1,409
442
2,840
2,585
905
1,680
2021
£000
894
1,212
309
2,415
2,216
821
1,395
28. Commitments and contingencies
Remuneration of management sellers including contingencies
Certain business acquisitions made by the Group include arrangements for remuneration payable to selling shareholders, which is
contingent upon certain performance conditions including the financial performance of the acquired business in meeting financial
targets and links to continuing employment of management sellers.
Following the acquisition of Hurley Partners Limited (“Hurley”) on 31 July 2020, management sellers will receive remuneration of up
to £7,028,000 over a two-year earn out to 31 July 2022, subject to the achievement of certain performance conditions including the
financial performance of Hurley meeting financial targets and continuing employment of management sellers. In the year to 31 May
2022, remuneration costs of £3,514,000 (2021: £2,928,000) have been recognised in the statement of comprehensive income, and
provision of £2,928,000 (2021: £2,928,000) is recognised in Note 26. Based on management’s latest forecasts we anticipate that further
remuneration costs of £586,000, representing the maximum remuneration available to management sellers, will be recognised over the
remaining period of contingency to 31 July 2022.
Following the acquisition of Pole Arnold Financial Management Limited (“Pole Arnold”) on 12 April 2021, management sellers will receive
remuneration of up to £3,000,000 over a two-year earn out to 12 April 2023, subject to the achievement of certain performance
conditions including the financial performance of Pole Arnold meeting financial targets and continuing employment of management
sellers. In the year to 31 May 2022, remuneration costs of £1,500,000 (2021: £250,000) have been recognised in the statement of
comprehensive income, and provision of £250,000 (2021: £250,000) is recognised in Note 26. Based on management’s latest forecasts
we anticipate that further remuneration costs of £1,250,000, representing the maximum remuneration available to management sellers,
will be recognised over the remaining period of contingency to 12 April 2023.
Following the acquisition of Maven Capital Partners UK LLP (“Maven”) on 30 June 2021, management sellers will receive remuneration of
up to £19,200,000 over a four-year earn out to 30 June 2025, subject to the achievement of certain performance conditions including
the financial performance of Maven meeting financial targets and continuing employment of management sellers. In the year to 31 May
2022, remuneration costs of £4,400,000 (2021: £nil) have been recognised in the statement of comprehensive income, and provision of
£4,400,000 (2021: £nil) is recognised in Note 26. Based on management’s latest forecasts we anticipate that further remuneration costs
of £14,800,000, representing the maximum remuneration available to management sellers, will be recognised over the remaining period
of contingency to 30 June 2025.
Following the acquisition of Richings Financial Management Limited (“Richings”) on 26 August 2021, management sellers will receive
remuneration of up to £459,000 over a two-year earn out to 26 August 2023, subject to the achievement of certain performance
conditions including the financial performance of Richings meeting financial targets and continuing employment of management
sellers. In the year to 31 May 2022, remuneration costs of £172,000 (2021: £nil) have been recognised in the statement of comprehensive
income, and provision of £172,000 (2021: £nil) is recognised in Note 26. Based on management’s latest forecasts we anticipate that
further remuneration costs of £287,000, representing the maximum remuneration available to management sellers, will be recognised
over the remaining period of contingency to 26 August 2023.
Capital commitments
At 31 May 2022, the Group had no capital commitments (2021: £nil).
Mattioli Woods plc Annual Report 2022F
S
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119
28. Commitments and contingencies continued
Sponsorship agreement
As part of the Group’s strategy to strengthen its brand awareness, the Group has a sponsorship agreement with rugby giants Leicester
Tigers. The agreement includes exclusive naming rights to the 26,000 capacity Mattioli Woods Welford Road stadium including full
stadium, dugout and website branding, shirt sponsorship on the Tigers’ home and away shirts, corporate hospitality rights and the
provision of exclusive content to Tigers fans. In October 2020, the Group entered into a new sponsorship agreement with Leicester
Tigers, which commenced in October 2020 and runs to June 2025, with a total cost of £3.4m over the term of the agreement.
Client claims
The Group operates in a legal and regulatory environment that exposes it to certain litigation risks. As a result, the Group occasionally
receives claims in respect of products and services provided and which arise in the ordinary course of business. The Group provides for
potential losses that may arise out of these contingencies.
In-specie pension contributions
As has been widely reported in the media, HMRC has challenged all SIPP providers on whether pension contributions could be made in-
specie. As a result, there are a number of tax relief claims made on behalf of our clients that have been challenged and we have received
or are awaiting assessment notices that are expected to amount to £0.9m (2021: £0.9m). These assessments were appealed before being
rejected at a First-tier Tribunal.
Irrespective of the result of this process, the impact on the financial position of the Group is expected to be neutral, with any liability
expected to be recovered from the affected clients whose tax liability it is.
Transfers from defined benefit schemes
The FCA has been conducting an industry wide review of the advice being provided on transfers from defined benefit to defined
contribution schemes since October 2015 (“the Review”).
As previously reported, following consideration of the increasing costs of professional indemnity insurance, additional regulatory
controls and the resources we would have to dedicate to this small part of our business, we have stopped giving pension transfer advice
to individuals with safeguarded or defined benefits. The impact of this decision and the Review on the Group’s financial performance is
not expected to be material.
29. Related party disclosures
Custodian REIT plc
In March 2014, the Company’s subsidiary, Custodian Capital, was appointed as the discretionary investment manager of Custodian REIT,
a closed-ended property investment company listed on the Main Market of the London Stock Exchange.
The Company’s Chief Executive Officer, Ian Mattioli, is a non-independent Non-Executive Director of Custodian REIT and the Company’s
former Chief Financial Officer, Nathan Imlach, was Company Secretary of Custodian REIT until he resigned from this position on 17 June
2020 to be replaced by Ed Moore, Finance Director of the Group’s subsidiary Custodian Capital Limited.
During the year, the Group received revenues of £4.6m (2021: £3.8m) in respect of annual management charges, administration and
marketing fees from Custodian REIT. Custodian REIT owed the Group £1,174,466 at 31 May 2022 (2021: £2,733).
Amati Global Investors Limited
The Company holds 49% of the issued share capital of Amati Global Investors Limited (“Amati”), an independent specialist fund
management business.
Two of the Company’s senior management team have been appointed to the board of Amati. Ian Mattioli is Deputy Chair and the
Group’s Chief Investment Officer, Simon Gibson, is a Non-Executive Director.
On 14 August 2018, the Group entered into an agreement to sublet space in its Edinburgh office to Amati for a term of five years.
During the year the Group received rent of £55,000 (2021: £48,000) from Amati as lessee, £5,000 (2021: £16,000) from the recharge
of other property related costs and consultancy fees of £47,000 (2021: £43,000).
Gateley (Holdings) plc
The Company’s former Chair, Joanne Lake, is a Non-Executive Director of Gateley (Holdings) plc, which is the holding company of
Gateley plc, a provider of commercial legal services. During the year the Group received revenues of £20,000 (2021: £41,000) in respect
of employee benefits services provided to Gateley plc.
K3 Capital Group plc
The Company’s Chief Executive Officer, Ian Mattioli, is a Non-Executive Chair of K3 Capital Group plc, a multi-disciplinary group of
professional services firms. During the year the Group paid fees of £26,927 (2021: £nil) to a subsidiary of K3 Capital Group plc in respect
of R&D tax credit consultancy fees.
Mattioli Woods plc Annual Report 2022F 120
Notes to the financial statements continued
29. Related party disclosures continued
Key management compensation
Key management personnel, representing those Executive Directors who served throughout the year and 8 (2021: 8) other executives,
received compensation in the form of short-term employee benefits and equity compensation benefits (see Note 11) which totalled
£5.5m for the year ended 31 May 2022 (2021: £4.4m).
Total remuneration of key management personnel is included in “employee benefits expense” and analysed as follows:
Wages and salaries
Social security costs
Pension
Benefits in kind
2022
£000
4,567
914
127
23
5,631
2021
£000
3,855
405
42
101
4,403
In addition, the cost of share-based payments, disclosed separately in the statement of comprehensive income, to key management
personnel was £0.8m (2021: £0.7m).
Transactions with other related parties
Following the transfer of Mattioli Woods’ property syndicate business to Custodian Capital, the legal structure of the arrangements
offered to investors changed to a limited partnership structure, replacing the previous trust-based structure. Each limited partnership
is constituted by its general partner and its limited partners (the investors), with the general partner being a separate limited company
owned by Custodian Capital (see Note 18).
The general partner and the initial limited partner enter into a limited partnership agreement, which governs the operation of the
partnership and sets out the rights and obligations of the investors. The general partners have appointed Custodian Capital as the
operator of the partnerships pursuant to an operator agreement between the general partner and Custodian Capital.
MW Properties No 25 Limited
The Group holds a 9.40% interest in MW Properties No 25 Limited, a nominee for a property syndicate. As at 31 May 2022, the Group
held an investment with a market value of £30,890 (2021: £28,095) in the syndicate.
30. Financial risk management
Financial assets principally comprise trade and other receivables, cash and short-term deposits, which arise directly from its operations.
Financial liabilities comprise certain provisions and trade and other payables. The main risks arising from financial instruments are market
risk (including interest rate risk, foreign exchange risk and price risk), credit risk, and liquidity risk. Each of these risks is discussed in
detail below.
The Group monitors financial risks on a consolidated basis, with its financial risk management based upon sound economic objectives
and good corporate practice. No hedging transactions have taken place during the years presented.
Market risk
(a) Interest rate risk
Interest rate risk is the risk that the Group’s financial performance will be adversely impacted by movements in interest rates. The Group
does not have any derivative financial assets whose value is linked to interest rates, therefore exposure to interest rate risk arises from
financial assets and liabilities incurring a market interest rate including cash and cash equivalents, as well as certain intercompany loan
agreements to which the Company is exposed. At 31 May 2022, the value of market interest bearing financial instruments on the Group’s
statement of financial position exposed to interest rate risk was £53.9m (2021: £21.9m), and Company £54.3m (2021: £23.5m) (Note 31).
This exposure is monitored to ensure that the Group is managing its interest earning potential within accepted liquidity and credit
constraints. Other than short-term overdrafts, the Group has no external borrowings and as such is not exposed to interest rate or
refinancing risk on borrowings. Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are
also made for varying periods of between one day and three months depending on the immediate cash requirements of the Group and
earn interest at the respective fixed term deposit rates.
A source of revenue is based on the value of client cash under administration. The Group has an indirect exposure to interest rate risk
on these cash balances held for clients. These balances are not on the Company or Group statements of financial position.
Mattioli Woods plc Annual Report 2022F
S
G
121
30. Financial risk management continued
Market risk continued
(a) Interest rate risk continued
The following table demonstrates the sensitivity to a 50bps (0.5%) change in interest rates, with all other variables held constant, of the
Group’s and Company’s profit before tax (through the impact on floating rate deposits). 50bps is considered the appropriate impact to
consider sensitivity given the reduction in the Bank of England’s base rate to a historic low and the reduced likelihood of increases in this
rate over the coming financial year. There is no impact on the Group’s equity.
2022
£ Sterling
£ Sterling
2021
£ Sterling
£ Sterling
Increase/
decrease
in basis points
Group
effect
on profit
before tax
£000
Company
effect
on profit
before tax
£000
+50
–50
+50
–50
270
(270)
109
(109)
272
(272)
117
(117)
(b) Foreign exchange translation and transaction risk
Foreign currency risk is the risk that the Group will sustain losses through adverse movements in currency exchange rates. With all of the
Group’s business located within the UK, the Group has no material exposure to foreign exchange translation or transaction risk and does
not hedge any foreign current assets or liabilities.
(c) Price risk
Price risk is the risk that a decline in the value of assets adversely impacts the profitability of the Group as a result of an asset not meeting
its expected value.
Property administration fees, discretionary management charges and adviser charges for intermediation are based on the value of
client assets under administration and hence the Group has an indirect exposure to security price risk on investments held by clients.
These assets are not on the Group’s statement of financial position. The risk of lower revenues is partially mitigated by asset class
diversification. The Group does not hedge its revenue exposure to movements in the value of client assets arising from these risks
and so the interests of the Group are aligned to those of its clients.
Credit risk
The Group and Company trades only with third parties it recognises as being creditworthy. In addition, receivable balances are
monitored on an ongoing basis and under the simplified approach, provisions for credit risk are assessed under the lifetime losses
approach as explained in Note 2, with all assets assessed as one portfolio (Notes 21 and 31).
Credit risk from the other financial assets of the Group and Company, which comprise cash and cash equivalents, arises from default
of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.
Mattioli Woods plc Annual Report 2022F
122
Notes to the financial statements continued
30. Financial risk management continued
Liquidity risk
The Group monitors its risk to a shortage of funds by considering the maturity of both its financial investments and financial assets
(e.g. accounts receivables, other financial assets) and projected cash flows from operations.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the possible use of bank overdrafts,
bank loans and leases. The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities at 31 May
2022 and 2021 based on contractual payments:
Group
Trade and other payables
Contingent consideration
Lease liabilities
At 31 May 2022
Trade and other payables
Contingent consideration
Lease liabilities
At 31 May 2021
Company
Trade and other payables
Contingent consideration
Lease liabilities
At 31 May 2022
Trade and other payables
Contingent consideration
Lease liabilities
At 31 May 2021
On
demand
£000
–
–
–
–
–
–
–
–
On
demand
£000
–
–
–
–
–
–
–
–
Less than
3 months
£000
19,226
579
308
20,113
12,695
44
227
12,966
Less than
3 months
£000
13,755
579
170
14,504
13,194
44
205
13,443
3 to 12
months
£000
–
1,701
813
1 to 5
years
£000
–
8,308
2,365
2,154
10,673
–
1,730
679
2,409
3 to 12
months
£000
–
1,100
408
1,508
–
1,730
616
–
1,329
1,261
2,590
1 to 5
years
£000
–
8,308
767
9,075
28,143
1,329
1,100
2,346
30,572
Maturity of liability
> 5
years
£000
–
–
731
731
–
–
418
418
Total
£000
19,226
10,588
4,217
34,031
12,695
3,103
2,585
18,383
Maturity of liability
> 5
years
£000
–
–
177
177
–
–
294
294
Total
£000
13,755
9,987
1,522
25,264
41,337
3,103
2,215
46,655
Capital management
The Company and certain of its subsidiaries are supervised in the UK by the Financial Conduct Authority (“FCA”). The Group manages
its capital through continuous review of the capital requirements of the Company and its regulated subsidiaries, which are monitored
by the Group’s management and reported monthly to the Board. The Group’s objectives when managing capital are:
• To comply with the regulatory capital requirements set by the FCA;
• To safeguard the Group’s ability to continue as a going concern so that it can continue to provide returns for shareholders
and benefits for other stakeholders; and
• To maintain a strong capital base to support the development of its business.
Capital is defined as the total of share capital, share premium, retained earnings and other reserves. Total capital of the Group at 31 May
2022 was £230.3m (2021: £86.1m) and Company was £239.1m (2021: £89.1m). The Group manages the capital structure and makes
adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the
dividend payment to shareholders, return capital to shareholders or issue new shares.
Regulatory capital and capital resource requirements of the Group and Company are determined in accordance with the requirements
of the Investment Firms Prudential Regime (“IFPR”) prescribed in the UK by the FCA, which came into effect on 1 January 2022.
Previously the Company had to comply with the requirements of the Capital Requirements Directive (“CRD IV”). Both CRD IV and IFPR
require continual assessment of the Group’s risks to ensure that sufficient capital resources are maintained to remain financially viable
throughout the economic cycle, address potentially material harms from its ongoing activities, and to enable the Company to conduct
an orderly wind down while minimising harm to customers.
The Group’s regulatory capital comprises Tier 1 capital, which is the total of issued share capital, retained earnings (net of foreseeable
dividends) and reserves created by appropriations of externally verified retained earnings, net of the carrying value of goodwill, other
intangible assets, deferred tax assets and investment in associates. The Company’s regulatory capital is calculated on the same basis
as that of the Group, with additional deduction made for the carrying value of investments in financial sector entities and certain other
qualifying holdings outside the financial sector. Neither the Group nor Company hold any Tier 2 or Tier 3 capital.
Mattioli Woods plc Annual Report 2022F
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123
30. Financial risk management continued
Capital management continued
The Company and regulated subsidiary companies submit quarterly returns to the FCA relating to their capital resources. Including
he audited results to 31 May 2022, shares issued during the year and admitted to Core Equity Tier 1 capital following the year end,
the proposed final dividend and retained earnings for the year, the total surplus on regulatory capital requirements was as follows:
Regulatory capital resources
Regulatory capital requirements
Surplus on regulatory capital requirements
Group
2022
£000
41,273
20,703
20,570
IFPR
Company
2022
£000
40,104
14,899
25,205
Group
2021
£000
21,740
13,346
8,394
CRD IV
Company
2021
£000
22,146
12,237
9,909
All the regulated firms within the Group maintained surplus regulated capital throughout the year. The regulated subsidiaries are limited
in the distributions that can be paid up to the Company by each of their individual capital resource requirements.
31. Financial instruments
The carrying amount of financial assets and financial liabilities recorded by category is as follows:
Financial assets
Cash and short-term deposits
Amortised cost loans and receivables (including trade and other receivables) (Note 21)
Amortised cost financial assets
Fair value through profit or loss (Note 18)
Fair value through other comprehensive income (Note 18)
Financial liabilities
Amortised cost (including trade and other payables and loan notes payable)
Fair value through profit and loss (including contingent consideration) (Note 26)
Group
2022
£000
53,912
25,532
79,444
4,262
1,500
Company
2022
£000
25,864
48,646
74,510
26
1,500
Group
2021
£000
21,888
16,957
38,845
–
526
85,206
76,036
39,371
Group
2022
£000
19,226
9,284
28,510
Company
2022
£000
10,125
8,683
18,808
Group
2021
£000
12,695
2,881
15,576
Company
2021
£000
10,909
26,180
37,089
–
526
37,615
Company
2021
£000
41,337
2,881
44,218
Fair values
The directors consider that the carrying value of financial instruments in the Company’s and the Group’s financial statements is
equivalent to fair value. The following table summarises the fair value measurements recognised in the statement of financial position
by class of asset or liability, grouped into different levels, defined as follows:
• Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities
• Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from prices)
• Level 3 – Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)
Group
Financial assets
Fixed asset investments at fair value through profit or loss (Note 18)
Fixed asset investments at fair value through other comprehensive income (Note 18)
At 31 May 2022
Financial liabilities
Contingent consideration (Note 26)
At 31 May 2022
Carrying
amount as at
31 May 2022
£000
Level 1
£000
Level 2
£000
Level 3
£000
4,262
1,500
5,762
9,284
9,284
2,991
–
2,991
–
–
–
–
–
–
–
1,271
1,500
2,771
9,284
9,284
Mattioli Woods plc Annual Report 2022F
124
Notes to the financial statements continued
31. Financial instruments continued
Fair values continued
Company
Financial assets
Fixed asset investments at fair value through profit or loss (Note 18)
Fixed asset investments at fair value through other comprehensive income (Note 18)
At 31 May 2022
Financial liabilities
Contingent consideration (Note 26)
At 31 May 2022
Carrying
amount as at
31 May 2022
£000
26
1,500
1,526
8,683
8,683
Level 1
£000
Level 2
£000
Level 3
£000
–
–
–
–
–
–
–
–
–
–
26
1,500
1,526
8,683
8,683
The Group has elected to designate its investment in Tiller Group Limited as fair value through other comprehensive income, due to the
Group’s intention to retain this equity investment as part of its strategic relationship with Tiller, held at a fair value of £1,500,000 (2021:
£500,000). This investment has been accounted for at cost as the most appropriate estimate of fair value, until additional information is
available to enable fair value measurement following launch of the application. Dividends from fixed asset investments designated as fair
value through other comprehensive during the year were £nil (2021: £nil).
The fair value of cash equivalents, accounts receivable and accounts payable approximate their carrying values due to their short-term
nature.
As set out in Note 3, the Group has entered into certain acquisition agreements that provide for contingent consideration to be paid.
The exact amounts payable cannot be determined as these depend on the future performance of the acquired businesses, but the basis
on which the valuation is prepared, along with detail of sensitivity to key assumptions, is set out in Note 2. The Group estimates the fair
value of contingent consideration payable on acquisitions to be £9.3m (2021: £2.9m).
Interest rate risk
The following table sets out the carrying amount after taking into account provisions for impairment, by maturity, of the Company’s
and the Group’s financial instruments that are exposed to interest rate risk:
Group
Floating rate
3-4 years
£000
4-5 years
£000
2-3 years
£000
1-2 years
£000
> 5 years
£000
< 1 year
£000
Total
£000
Cash and cash equivalents
At 31 May 2022
Group
Floating rate
Cash and cash equivalents
At 31 May 2021
Company
Floating rate
Financial assets (current)
Cash and cash equivalents
At 31 May 2022
Company
Floating rate
Financial assets (current)
Cash and cash equivalents
At 31 May 2021
53,912
53,912
< 1 year
£000
21,888
21,888
< 1 year
£000
28,443
25,864
54,307
< 1 year
£000
12,576
10,909
23,485
–
–
–
–
–
–
–
–
–
–
1-2 years
£000
2-3 years
£000
3-4 years
£000
4-5 years
£000
> 5 years
£000
–
–
–
–
–
–
–
–
–
–
1-2 years
£000
2-3 years
£000
3-4 years
£000
4-5 years
£000
> 5 years
£000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1-2 years
£000
2-3 years
£000
3-4 years
£000
4-5 years
£000
> 5 years
£000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
53,912
53,912
Total
£000
21,888
21,888
Total
£000
28,443
25,864
54,307
Total
£000
12,576
10,909
23,485
Interest on financial instruments classified as floating rate is repriced at intervals of less than one year. Other financial instruments of the
Company and Group that are not included in the above table are non-interest bearing and therefore not subject to interest rate risk.
Mattioli Woods plc Annual Report 2022F
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125
31. Financial instruments continued
Credit risk
The Group’s principal financial assets are cash and short-term deposits and trade and other receivables.
The only significant concentrations of credit risk relate to the Group’s bank deposits and exposure to credit risk arising from default of
the counterparty. The maximum exposure is equal to the carrying amount of these deposits. Credit risk mitigation practices employed by
the Group include monitoring of the creditworthiness of the financial institutions we hold deposits with and spreading funds accordingly
to reduce exposure to institutions with lower credit ratings. At 31 May 2022, the Group’s bank deposits were held across the following
banks: Royal Bank of Scotland plc, Lloyds Bank plc, Bank of Scotland plc, Barclays Bank UK plc, Metro Bank plc, Santander UK plc, Cater
Allen Limited, Investec Bank plc, Northern Bank Limited (Danske Bank), Clydesdale Bank plc, Hinckley & Rugby Building Society and
Market Harborough Building Society.
Given the nature of the Group’s operations, it does not have significant concentration of credit risk in respect of trade receivables, with
exposure spread over a large number of customers. Credit risk mitigation practices employed by the Group include reviewing the credit
quality of customers and limiting credit exposures accordingly, arranging for the settlement of trade receivables directly from customers’
investments where possible, and monitoring aged trade receivables and engaging with customers where trade receivables become overdue.
A provision for lifetime expected credit losses on financial assets is made based on previous experience is evidence of a reduction
in the recoverability of the cash flows. The basis of our calculation of credit loss experience and provisions for expected credit losses
are explained in Note 2, and details of financial assets and the associated provision for impairment are disclosed in Note 21.
32. Ultimate controlling party
The Company has no ultimate controlling party.
Mattioli Woods plc Annual Report 2022F
126
Alternative performance measure workings
Recurring revenue
A measure of sustainable revenue, calculated as revenue earned from ongoing services as a percentage of total revenue.
Timing of revenue recognition
At a point in time:
Investment and asset management
Private equity asset management
Pension consultancy and administration
Property management
Employee benefits
Non-recurring revenue
Over time:
Investment and asset management
Private equity asset management
Pension consultancy and administration
Property management
Employee benefits
Recurring revenue
Total revenue
Recurring revenue
Organic revenues
A measure of revenue excluding revenue from businesses acquired in the current or prior year.
Group
Total revenue
Revenue from acquisitions in the prior year
Revenue from acquisitions in the current year
Organic revenue
2022
£000
2021
£000
3,654
8,543
607
92
1,346
14,242
46,771
17,610
19,111
6,181
4,311
93,984
2,041
–
1,018
625
917
4,601
31,329
–
17,789
4,285
4,611
58,014
108,226
62,615
86.8%
92.7%
2022
£000
108,226
(10,800)
(35,270)
2021
£000
62,615
(6,050)
–
62,156
56,565
Adjusted EBITDA
A measure of the underlying profitability, excluding items that are non-cash or affect comparability between periods, calculated as
statutory operating profit before financing income or costs, tax, depreciation, amortisation, impairment and acquisition-related costs,
share of profit from associates (net of tax), gain on bargain purchase and contingent consideration recognised as remuneration.
Group
Statutory operating profit before financing
Amortisation of acquired intangibles
Amortisation of software
Depreciation
EBITDA
Share of profit from associates, net of tax
Acquisition-related costs
Gain on bargain purchase
Deferred consideration presented as remuneration
Adjusted EBITDA
2022
£000
7,302
7,215
331
2,762
2021
£000
4,231
2,774
304
2,772
17,610
10,081
1,614
3,721
–
9,664
1,141
2,595
(288)
3,803
32,609
17,332
Mattioli Woods plc Annual Report 2022F
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127
Adjusted PBT
A measure of profitability before taxation, excluding items that are non-cash or affect comparability between periods, calculated as
statutory profit before tax excluding amortisation of acquired intangibles and acquisition-related costs, gain on bargain purchase,
contingent consideration recognised as remuneration and acquisition-related notional interest charges.
Group
Statutory profit before tax
Amortisation of acquired intangibles
Acquisition-related costs
Gain on bargain purchase
Deferred consideration presented as remuneration
Acquisition-related notional finance cost
Adjusted PBT
2022
£000
7,989
7,215
3,721
–
9,664
872
2021
£000
5,148
2,774
2,595
(288)
3,803
133
29,461
14,165
Adjusted PAT
A measure of profitability, net of taxation, based on Adjusted PBT and deducting tax at the standard rate of 19% (2021: 19%).
Group
Adjusted PBT
Income tax expense at standard rate of 19%
Adjusted PAT
2022
£000
29,461
(5,598)
23,863
2021
£000
14,165
(2,691)
11,474
Adjusted EPS
A measure of total comprehensive income for the year, net of taxation, attributable to equity holders of the Company, adjusted to add
back amortisation of acquired intangibles and acquisition-related costs, gain on bargain purchase, contingent consideration recognised
as remuneration and acquisition-related notional interest charges, divided by the weighted average number of ordinary shares in issue.
Group
Adjusted PAT
Basic weighted average number of shares (see Note 13)
Adjusted EPS
2022
£000
23,863
49,393
48.3p
2021
£000
11,474
27,936
41.1p
Adjusted cash generated from operations
A measure of operating cash flows, excluding items that are incurred as a result of the Group’s acquisition activities, calculated as
statutory cash generated from operations excluding contingent remuneration paid on acquisition of subsidiaries, and acquisition-related
costs paid.
Group
Statutory cash generated from operations
Contingent remuneration paid on acquisition of subsidiaries (see Note 26)
Acquisition costs paid
Adjusted cash generated from operations
2022
£000
19,641
5,905
5,587
31,133
2021
£000
20,362
609
732
21,703
Mattioli Woods plc Annual Report 2022F
128
Related undertakings
Related undertakings
The Companies Act 2006 requires disclosure of certain information about the Group’s related undertakings, which is set out in this note.
Related undertakings comprise subsidiaries, joint ventures, associates and other significant holdings. Significant holdings are where the
Group either has a shareholding greater than or equal to 20% of the nominal value of any share class, or a book value greater than 20%
of the Group’s assets.
Details of the Group’s related undertakings along with the country of incorporation, the registered address, the classes of shares held
and the effective percentage of equity owned at 31 May 2022 are as follows:
Company name
England and Wales
1 New Walk Place, Leicester, LE1 6RU
Acomb Trustees Limited
APUK14002 Limited
APUK15001 Limited
APUK15002 Limited
AR Pension Trustees Limited
Bank Street Trustees Limited
Brogan Group Investments Limited
Broughtons Financial Planning Limited
CC Private (202) Limited
CC Private (204) Limited
CC Private (205) Limited
Chapel Trustees Limited
City Trustees Limited
CP SIPP Trustees Limited
CP SSAS Trustees Limited
Custodian (Inland RCF) General Partner Limited
Custodian Capital Limited
Eltek House Limited
GB Pension Trustees Limited
Great Marlborough Street Pension Trustees Limited
Hurley Partners Limited
Hurley Trustees Services Limited
JB Trustees Limited
Lindley Trustees Limited
M C Trustees (Administration) Limited
M C Trustees (Pensions) Limited
M C Trustees Limited
M.W. Trustees Limited
Mattioli Woods (New Walk) Limited
Maven Capital Partners UK LLP
Mayflower Trustees Limited
MC Nominees Limited
MCT (Properties) Limited
Montagu Limited
MW Personal Equity (Harbinger Self Storage) Limited
MW Private Equity (Harbinger Self Storage) General Partner Limited
MW Private Equity (Rotherhill) Limited
MW Private Investors (102) General Partner Limited
Holding
Holding %
Nature of business
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary and preference
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Trustee company
Trustee company
Trustee company
Trustee company
Trustee company
Trustee company
Trustee company
Non-trading
Trustee company
Trustee company
Trustee company
Trustee company
Trustee company
Trustee company
Trustee company
General partner
Asset management
Trustee company
Trustee company
Trustee company
Non-trading
Trustee company
Trustee company
Trustee company
Pension administration
Pension administration
Trustee company
Trustee company
Property development
Asset management
Trustee company
Nominee company
Dormant
Wealth management
Trustee company
General partner
Trustee company
General partner
Mattioli Woods plc Annual Report 2022F S
G
129
Nature of business
Trustee company
General partner
General partner
General partner
General partner
General partner
Trustee company
General partner
General partner
General partner
General partner
General partner
General partner
General partner
Trustee company
Trustee company
General partner
General partner
General partner
Trustee company
General partner
Trustee company
Trustee company
Trustee company
Trustee company
Trustee company
Trustee company
Trustee company
Trustee company
Trustee company
Holding company
Trustee company
Holding company
Wealth management
Trustee company
Wealth management
Trustee company
Trustee company
Trustee company
Trustee company
Trustee company
Trustee company
Nominee company
General partner
Holding
Holding %
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Company name
MW Private Investors (103) EPUT Limited
MW Private Investors (103) General Partner Limited
MW Private Investors (105) General Partner Limited
MW Private Investors (106) General Partner Limited
MW Private Investors (Beech Properties) General Partner Limited
MW Private Investors (CITU) General Partner Limited
MW Private Investors (Clear Nursery) Limited
MW Private Investors (Expedia Dental) General Partner Limited
MW Private Investors (Highcross BTR) General Partner Limited
MW Private Investors (Heaton Group) General Partner Limited
MW Private Investors (Newstead Relf) General Partner Limited
MW Private Investors (Proseed) General Partner Limited
MW Private Investors (Prosperity Liverpool) General Partner Limited
MW Private Investors (Swift Point) General Partner Limited
MW Private Investors (The Priest House Hotel) Limited
MW Private Investors (The Square) Limited
MW Private Investors (Tungsten Frimley) General Partner Limited
MW Private Investors (Tungsten Witney) General Partner Limited
MW Private Investors (Versant) General Partner Limited
MW Private Investors (Walrus) Limited
MW Private Investors (Welbeck Land) General Partner Limited
MW Properties (No 42) Limited
MW Properties (No 46) Limited
MW Properties (No 49) Limited
MW Properties (No 60) Limited
MW Properties (No 17) Limited
MW Properties (No 20)Limited
MW Properties (No 25) Limited
MW Properties (No 32) Limited
MW Properties (No 35) Limited
Old Station Road Holdings Limited
PC Trustees Limited
Pension Consulting Limited
Pole Arnold Financial Management Limited
Professional Independent Pension Trustees Limited
Richings Financial Management Limited
Robinson Gear (Management Services) Limited
Ropergate Trustees Limited
Simmonds Ford Trustees Limited
SLT Trustees Limited
Taylor Patterson Trustees Ltd
Welbeck Strategic Land III Limited
1-2 Royal Exchange Buildings, London, United Kingdom, EC3V 3LF
Dvest Nominees Limited
Finance Durham GP Limited
Mattioli Woods plc Annual Report 2022F 130
Related undertakings continued
Company name
Maven GPCO 1 Limited
Maven GPCO 2 Limited
Maven MEIF (EM) GP (ONE) Limited
Maven MEIF (WM) GP (ONE) Limited
Maven UK Regional Buyout 1 GP LLP
Clarence House, Clarence Street, Manchester, England, M2 4DW
GMLF GP Limited
NPIF NW Equity (GP) Limited
172 Lord Street, Southport, Merseyside, PR9 0QA
Ludlow Wealth Management Limited
LWMG Midco Limited
LWMG Topco Limited
Scotland
Kintyre House, 205 West George Street, Glasgow, Scotland, G2 2LW
GMLF GP A LLP
Maven (CL) Limited
Maven Capital (TH) Limited
Maven Capital Cardiff Trustee Limited
Maven Capital GCM Limited
Maven Capital Investments Limited
Maven Coinvest GP A LLP
Maven Co-Invest B1 GP LLP
Maven Co-Invest GP Limited
Maven MIP GP LLP
Maven NEDF GP Limited
Maven Nominee Limited
Maven Partners (ABZ) GP LLP
Maven Partners (Ambassador Homes) GP LLP
Maven Partners (Barrow HIEX) GP LLP
Maven Partners (Brighton) GP LLP
Maven Partners (Carters Yard) GP LLP
Maven Partners (Dalian House) GP LLP
Maven Partners (Douglas House Glasgow) GP LLP
Maven Partners (Goldcrest) GP LLP
Maven Partners (Greenock) GP LLP
Maven Partners (HbH Manchester) GP LLP
Maven Partners (Inverness) GP LLP
Maven Partners (Mansfield) GP LLP
Maven Partners (Middleton St George) GP LLP
Maven Partners (Murieston) GP LLP
Maven Partners (Nottingham) GP LLP
Maven Partners (Westerhill Road) GP LLP
Maven Property (Inverness Campus) Ltd (dissolved 21 June 2022)
Maven Property Investments Limited
Maven SLF FP Limited
Holding
Holding %
Nature of business
Ordinary
Ordinary
Ordinary
Ordinary
Partnership
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
Designated member services
100%
Designated member services
100%
100%
100%
100%
100%
100%
100%
100%
General partner
General partner
General partner
General partner
General partner
Wealth management
Holding company
Holding company
Partnership
100%
General partner
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Partnership
Partnership
Ordinary
Partnership
Ordinary
Ordinary
Partnership
Partnership
Partnership
Partnership
Partnership
Partnership
Partnership
Partnership
Partnership
Partnership
Partnership
Partnership
Partnership
Partnership
Partnership
Partnership
Ordinary
Ordinary
Ordinary
100%
Designated member services
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Trustee company
Trustee company
LLP corporate member
Holding company
General partner
General partner
General partner
General partner
General partner
Holding company
General partner
General partner
General partner
General partner
General partner
General partner
General partner
General partner
General partner
General partner
General partner
General partner
General partner
General partner
General partner
General partner
Dormant
Asset management
Limited partner
Mattioli Woods plc Annual Report 2022F Company name
Holding
Holding %
Maven UK Regional Buyout 1 Founder Partner GP LLP
MC Cardiff General Partner LLP
MP (CPPI) GP LLP
MP (Maidenhead) GP LLP
MP (Shire Hall Durham) GP LLP
SLF GP A LLP
SLF GP Limited
The Turris Partnership Limited
Daerven Barrow LLP
8 Coates Crescent, Edinburgh, Scotland, EH3 7AL
Caledonia Asset Management Limited
Amati Global Investors Limited
Northern Ireland
Rivers Edge, 11 Ravenhill Road, Belfast, BT6 8DN
Callender Street Nominees Limited
Callender Street Trustees Limited
Fitzwilliam (Ascot) Holdings Limited
Fitzwilliam (GYLO) Holdings Limited
Fitzwilliam (President) Holdings Limited
Fitzwilliam (Waltham Forest) Holdings Limited
Fitzwilliam Trustees (Marylebone & Cotswold) Holdings Limited
Fitzwilliam Trustees Number 1 Limited
Fitzwilliam Trustees Number 10 Limited
Fitzwilliam Trustees Number 11 Limited
Fitzwilliam Trustees Number 12 Limited
Fitzwilliam Trustees Number 2 Limited
Fitzwilliam Trustees Number 3 Limited
Fitzwilliam Trustees Number 4 Limited
Fitzwilliam Trustees Number 5 Limited
Fitzwilliam Trustees Number 6 Limited
Fitzwilliam Trustees Number 7 Limited
Fitzwilliam Trustees Number 8 Limited
Fitzwilliam Trustees Number 9 Limited
SSAS Solutions (UK) Ltd
Partnership
Partnership
Partnership
Partnership
Partnership
Partnership
Ordinary
Ordinary
Partnership
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
30%
100%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
S
G
131
Nature of business
General partner
General partner
General partner
General partner
General partner
General partner
General partner
Wealth management
Holding company
Wealth management
Asset management
Holding company
Trustee company
Holding company
Holding company
Holding company
Holding company
Holding company
Trustee company
Trustee company
Trustee company
Trustee company
Trustee company
Trustee company
Trustee company
Trustee company
Trustee company
Trustee company
Trustee company
Trustee company
Pension administration
Mattioli Woods plc Annual Report 2022F 132
Company information
Directors:
David Kiddie
Ian Mattioli MBE
Ravi Tara
Iain McKenzie
Michael Wright
Anne Gunther
Martin Reason
Edward Knapp
Non-Executive Chair
Chief Executive Officer
Chief Financial Officer
Chief Operating Officer
Group Managing Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Company secretary:
Maven Capital Partners UK LLP
Registered office:
1 New Walk Place
Leicester
LE1 6RU
Registered number:
03140521
Nominated adviser and broker:
Joint broker:
Auditor:
Principal solicitors:
Principal bankers:
Registrars:
Canaccord Genuity Limited
88 Wood Street
London
EC2V 7QR
Singer Capital Markets Limited
1 Bartholomew Lane
London
EC2N 2AX
Moore Kingston Smith LLP
9 Appold Street
London
EC2A 2AP
Walker Morris LLP
33 Wellington Street
Leeds
LS1 4DL
Lloyds Bank plc
1 Lochrin Square
92 Fountainbridge
Edinburgh
EH3 9QA
DWF LLP
2 Lochrin Square
96 Fountainbridge
Edinburgh
EH3 9QA
Bank of Scotland plc
1 Lochrin Square
92 Fountainbridge
Edinburgh
EH3 9QA
Link Market Services Limited
Link Asset Services
40 Dukes Place
London
EC3A 7NH
Mattioli Woods plc Annual Report 2022F
Five-year summary (unaudited)
S
G
133
Revenue
Employee benefits expense
Other administrative expenses
Share-based payments
Impairment loss on financial assets
Profit on disposal of fixed asset investments
Profit/(loss) on disposal of property, plant and equipment
Gain on bargain purchase
Deferred consideration presented as remuneration
Gain on revaluation of derivative financial instrument
EBITDA
Acquisition-related costs
Share of profit from associates
Gain on bargain purchase
Deferred consideration presented as remuneration
Gain on derivative financial asset
Adjusted EBITDA
Amortisation and impairment
Depreciation
Operating profit before financing
Net financing (costs)/revenue
Share of profit from associate, net of tax
Profit before tax
Income tax expense
Profit for the year
Assets under management, administration and advice (£m)
Headline debtors’ ratio (days)
External client loss rate
EBITDA margin
Adjusted EBITDA margin
Basic EPS (pence)
Adjusted EPS (pence)
Dividends paid and proposed (pence per share)
2022
£000
2021
£000
2020
£000
2019
£000
2018
£000
108,226
62,615
58,407
57,494
57,783
(59,571)
(19,803)
(1,729)
(258)
406
3
–
(9,664)
–
(34,141)
(13,332)
(1,475)
(25)
–
(46)
288
(3,803)
–
(27,623)
(10,897)
(1,335)
(605)
–
(18)
–
(750)
–
(31,239)
(10,771)
(1,531)
(358)
–
(125)
–
(125)
100
(32,148)
(11,674)
(1,832)
(273)
–
(67)
–
(1,582)
540
17,610
10,081
17,179
13,445
10,747
3,721
1,614
–
9,664
–
2,595
1,141
(288)
3,803
–
334
633
–
750
–
126
480
–
125
(100)
125
240
–
1,582
(540)
32,609
17,332
18,896
14,076
12,154
(7,546)
(2,762)
7,302
(927)
1,614
7,989
(3,078)
(2,772)
4,231
(2,437)
(2,547)
12,195
(2,962)
(1,288)
9,195
(2,225)
(822)
7,700
(224)
1,141
(97)
633
(15)
480
25
240
5,148
12,731
9,660
7,965
(3,870)
(3,757)
(3,244)
(1,963)
4,119
1,391
9,487
7,697
14,903.9
37.1
2.1%
16.3%
30.1%
8.3
48.3
26.1
12,123.5
30.2
2.3%
16.1%
27.7%
5.1
41.1
21.0
9,300.3
34.4
2.5%
29.4%
32.4%
35.2
48.0
20.0
9,382.5
32.7
2.2%
23.4%
24.5%
29.0
35.9
20.0
(1,529)
6,436
8,729.2
32.4
1.5%
18.6%
21.0%
24.5
33.7
17.0
Mattioli Woods plc Annual Report 2022F
134
Financial calendar
13 September 2022
22 September 2022
23 September 2022
28 October 2022
3 November 2022
Announcement of final results for the year ended 31 May 2022
Ex-dividend date for ordinary shares
Record date for final dividend
Annual General Meeting
Payment of final dividend on ordinary shares
Mattioli Woods plc Annual Report 2022F S
G
135
135
Design and Production
www.carrkamasa.co.uk
Mattioli Woods plc Annual Report 2022F Mattioli Woods plc
1 New Walk Place
Leicester
LE1 6RU
Tel: 0116 240 8700
Fax: 0116 240 8701
info@mattioliwoods.com
www.mattioliwoods.com