Ian Mattioli and Bob Woods left pension services specialist Pointon York 15 years ago to set up their own pensions consultancy partnership, Mattioli Woods (MW). Last month, they celebrated the company’s first anniversary as an AIM-quoted company, with a share price up 60 per cent and a market value of £36 million, and are concentrating on further expansion, by developing existing and new areas of business and negotiating acquisitions.

Leicester-based MW has carved out a niche for itself providing pensions and investment advice and administration to the upper ends of the market in Self Invested Personal Pensions (SIPPs) and Small Self Administered Pension Schemes (SSASes). The current preoccupation with pension provision and the Government’s ‘A-Day’ legislation to simplify the regulatory structure have helped create robust conditions for specialist pensions advice. MW increased the number of SIPP and SSAS schemes to which it was leading adviser by 40 per cent to 1,400 in the year to May.

Woods, chairman at 52, says these schemes represent nearly £1 billion at this stage. ‘Our SIPPs average between £300,000 and £400,000, against a national average of £100,000,’ he comments, ‘and our SSASes’ average is £700,000 against a typical £400,000.’

This gives MW scope to ‘provide proactive hand-holding’ and a bespoke service to clients, including helping them to find portfolio managers. The company prefers to reduce the more fickle, fluctuating commission element in its income and boost the time-costed fee element: ‘Administration fees are 98 per cent predictable and so are consultancy fees,’ maintains Woods.

Woods and Mattioli, chief executive at 44, are seeking new areas for MW, which helped set up ten new property syndicates in its last financial year and launched a new SIPP in conjunction with Bank of Scotland. MW sees persistent demand for consultancy services from companies wishing to amend or end final salary pension schemes.

Woods argues that the Government’s proclaimed intention, to abolish the requirement for those over 75 to invest in annuities, should pave the way for the introduction of ‘family pension schemes’, which can continue after death. That is why he, in common with others in the business, is concerned that the Treasury has woken up to how much tax it might lose if everyone switched from annuities to ‘alternatively secured pensions’, and may be minded to reverse engines and maintain the annuity obligation.

MW, which raised £6 million at 132p when it floated in November 2005 and paid half to repay directors’ loans, acquired the portfolios of two other groups, Geoffrey Bernstein and Suffolk Life, last year. With MW’s shares trading north of £2, Woods says the company is once again ‘talking to a couple of people’ about new acquisitions.

The sector is growing and the large number of small operators make it ripe for consolidation, he suggests. What interests investors is the possibility that, as MW grows organically and by acquisition, it will become big enough to be a bid target itself for some of the larger players in the sector.

Although turnover rose a respectable 17.6 per cent to £7.6 million in the year to May, pre-tax profits slid from £2.7 million to £2.3 million. The company blames this on the cost of appointing three new directors, ensuring compliance with the ‘A-Day’ rules and a head office move.

Broker Charles Stanley expects MW to lift profits to £2.8 million pre-tax on £8.8 million revenues in the current year, with steady progress to £3.9 million pre-tax on £10.7 million revenues in 2008-09. As a niche player, with eventual bid prospects, that makes the shares a speculative buy.

Mattioli Woods	AIM	£38.12m	221.00p	0.00p
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