Mattioli Woods is growing fast

With its roots in pensions advisory services and administration, Mattioli Woods is carrying out more work in investment and asset management. Following the introduction of the pension freedom changes last year, retirees and those approaching retirement have more options to choose how they use their pension pot. During the 12 months to the end of May 2016, its investment and asset management business increased sales from advising clients on pensions and personal investments by half to £17m. This makes the division the group's largest by revenue, accounting for 40 per cent of the total, compared with 33 per cent in 2015.

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What's more, management says its typical client base has broadened beyond small companies to include professionals, executives and affluent retirees. By managing client funds on a discretionary basis, Mattioli has been able to increase the investment division's proportion of high-quality recurring revenue. Discretionary funds under management grew 16 per cent last year to £1.17bn, which helped boost recurring investment revenue from 78 per cent to 82 per cent of the total.

The group's other divisions are also performing well, with the pension consultancy and administrative division which accounts for 39 per cent of revenue, growing sales last year at about 6 per cent, and both property management and employee benefits showing growth of about 10 per cent. What's more, falling banking revenues and margins resulting from rate cuts have not done too much harm to overall performance. The future of client banking is currently under review.

While organic growth was a healthy 11 per cent last year, bolt-on acquisitions of sub-scale investment businesses are an important part of the strategy. The group has spent £40m on 18 acquisitions since floating on the Alternative Investment Market (Aim) in 2005, including five purchases in its last financial year. A typical deal was its purchase of MC Trustees for up to £3m earlier this month - it administers more than 1,500 self-invested personal pensions (Sipps) and small self-administered pension schemes (SSASs) and brought an additional £400m in assets under administration for its pensions consultancy and administration business. Importantly, the business is seen as a strong cultural fit and there should be plenty of cost-cutting potential. An £18.6m share placing in June last year means the company is in a strong financial position to keep up the acquisitions.