News
31 October 2005
Mattioli Woods announces intention to float on AIM
Mattioli Woods plc, the specialist pensions consultancy, today announces its intention to seek admission of its shares to trading on the AIM Market (“AIM”) of the London Stock Exchange. Dealings are expected to commence on AIM in November 2005.
Established in 1991 by Ian Mattioli and Bob Woods, the Company provides pensions consultancy and administration services primarily to owner-managers, senior executives and professionals. The Company’s key activities include complex pensions consultancy, the provision of self-invested personal pensions (“SIPP”) and small self-administered pension schemes (“SSAS”), advice on related business affairs, including pension investment services and the facilitation and administration of syndicated property schemes. Its focus is at the higher end of the market where clients require bespoke service and specialist advice.
Headquartered in Leicester and employing 76 staff including 12 pension consultants, Mattioli Woods has over 600 SIPP clients with an average fund size of £342,000 compared to the market average of £208,000 and over 500 corporate SSAS clients with an average fund size of £730,000 against a market average of £430,000.
With a strong network of intermediary contacts throughout the UK, the practice has grown rapidly over the last decade providing consultancy and pension trustee services. In 1995 the Partnership developed its first bespoke self invested personal pension scheme and has since developed five SIPP products, in conjunction with other financial institutions. In the year ended 31 May 2005, Group turnover was £6.4 million with normalised operating profit of £1.9 million.
The market for pensions consultancy services in the UK is fragmented, with a wide variation in the size of Mattioli Woods’ competitors and in the scope of services they offer.
Competition in volume terms comes from the large insurance companies and independent financial advisers (“IFAs”). However, this type of business tends to be primarily “off the peg” and does not have the level of individual advice offered by Mattioli Woods. A number of Mattioli Woods’ existing clients have moved from its competitors in search of a more bespoke service or after a “trouble shooting” exercise carried out by Mattioli Woods.
At the other end of the UK market, there are many sole traders and partnerships operating small scale businesses serving a limited number of clients. Few have developed the critical mass already achieved by Mattioli Woods. It is likely that the burden of regulation and changes to systems arising from the Government’s pension simplification “A day” with effect from April 2006, will pose these small practices an increasing challenge. Mattioli Woods regards these operations not only as an element of competition but also as potential acquisition targets.
The UK’s pensions industry has been beset by a number of complex problems such as under-funding, exacerbated by the stock market crash, poor governance and historical pensions mis-selling. In the UK, successive governments have created piecemeal pensions related legislation. There are currently eight different sets of rules in existence governing pensions, making the existing system both complicated and difficult for consumers to understand.
This environment has led to a significant increase in the uptake of SIPPs and SSASs, primarily due to the greater control these products give to individuals over their own pensions arrangements. Abolishing all eight complex current forms of pension legislation, the new “A-day” legislation will ensure that all pensions are subject to the same tax treatment, regardless of the type of scheme or when it was established.
The greater investment freedoms, particularly the ability to purchase residential property and the abolition of the compulsion to purchase an annuity are expected to significantly boost the personal pensions market and the opportunity for specialist advisers, particularly those serving high net worth individuals, such as Mattioli Woods.
Commenting on the decision to float on AIM, Bob Woods, Executive Chairman of Mattioli Woods, said: “The Company has a proven business model based on a culture of client service and innovation. Our admission to AIM will enable Mattioli Woods to build on its strong reputation in the pensions consultancy market, further incentivise the management team and continue to grow the business through increasing market share, both organically and by acquisition.
“The Government’s new pensions simplification “A Day” legislation, due to take effect in April 2006, is already providing a significant boost to the SIPP market in particular. We believe that this will underpin continuing strong growth for the foreseeable future.
“The UK pensions consultancy is highly fragmented and would benefit from consolidation. The Company post listing will also be seeking to make suitable acquisitions within the industry which would be complementary to our existing business and prospects.”
Williams de Broë Plc is acting as Nominated Adviser and as Broker to the Company.
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For further information:
Mattioli Woods plc |
www.mattioli-woods.com |
|
Bob Woods, Executive Chairman Ian Mattioli, Chief Executive |
Tel: +44 (0) 116 240 8700 |
Williams de Broë Plc |
www.wdebroe.com |
|
Joanne Lake, Corporate Finance |
Tel: +44 (0) 113 243 1619 |
Media enquiries:
Abchurch |
www.abchurch-group.com |
|
Sarah Hollins/Justin Heath |
Tel: +44 (0) 113 203 1341 |
Photography
Both hard and soft copies of photographs of Bob Woods, Executive Chairman and Ian Mattioli, Chief Executive are available from Abchurch. To arrange, please contact Justin Heath at justin.heath@abchurch-group.com.
Notes to editors
Self-Invested Personal Pension (SIPP) is a type of personal pension plan which allows an individual to make their own investment decisions or to formulate their investment strategy in conjunction with their pensions adviser. A SIPP allows a wide range of investments, including unit trusts; open ended investment companies and investment trusts; stocks and shares in the UK and overseas; and commercial property. It therefore offers far greater flexibility than traditional occupational and personal pensions.
The SIPP market is currently estimated to have £25bn of scheme assets. There are estimated to be 120,000 SIPPs in existence, with an average fund size of £208,000. This is predicted to rise to 500,000 by 2010 (source: Pensions Management June 2005). The market is split between insured and independent practitioner arrangements.
Small Self-Administered Scheme (SSAS) is an occupational pension scheme with up to 11 members and is established by an employer for the benefit of some or all of its key employees. It is suited to most privately owned limited companies where the shares are mainly or wholly owned by directors employed in that business.
An SSAS is established under trust by a company's directors who are both the members and trustees of the pension scheme. It provides a tax-efficient environment in which a company's profits can be invested to provide retirement benefits. An SSAS gives its members the opportunity to maximise their pension funds prior to retirement by giving them control over their investments. Unlike other pension schemes, the members can invest their SSAS's funds in their own company through share purchase, unsecured loans for purchasing plant, machinery and commercial property to lease back to the company. Owner-managers can make their SSASs work for their business whilst building up a substantial pension fund to benefit themselves in retirement. An SSAS is also ring fenced from the company's creditors should the company become insolvent.
Permitted SSAS investments include the commercial property occupied by the company, loans from the pension fund to the company, the borrowing of money to buy an asset if the pension fund does not have the resources and up to 30 per cent of the shares in an unlisted company (including the company sponsoring the SSAS). Other acceptable investments are shares, deposit accounts, copyrights, financial futures, commodity futures and traded options.
The UK SSAS market is currently estimated to have £9.4bn of scheme assets. There are estimated to be over 21,500 SSASs in existence, with an average fund size of £430,000.
Pensions simplification - with effect from April 2006, the Government is introducing legislation to simplify pensions. The key features of the new legislation are as follows:
- The ability to build up a tax-exempt approved pension fund by retirement of a lifetime limit of up to £1.5 million (in today's terms) in a largely tax-exempt environment;
- the ability for members to personally contribute up to 100 per cent. of their earnings with full tax relief and for additional employer contributions to be made up to a total of £215,000 (inclusive of any member's contributions). Neither the upper cap of £1.5 million nor the annual input limit is limited by reference to actual earnings;
- tax-free cash benefit at retirement to be calculated as 25 per cent. of the fund value, subject to the lifetime limit;
- a 'light-touch' compliance regime which will make pension planning much more flexible, particularly in taking away some of the irrevocable aspects of existing schemes;
- deregulation of permitted investments, including the ability to invest in residential property both at home and abroad; and
- the abolition of the compulsion to purchase annuities at age 75. This may pave the way for the inheritance of pension schemes by the next generation.