Mattioli Woods reports 32.1% EBITDA growth in 2020 and 7.1 pp EBITDA Margin growth from 23.6% to 30.7%

02 Sep 2020 • About Mattioli Woods ($MTW) • By InTwits

Mattioli Woods reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:

EBITDA Margin is expanding: 30.7% in FY2020 vs. 23.6% in FY2019 vs. 20.8% in FY2016
Mattioli Woods has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.3%. At the same time it's a lot of higher than industry average of 1.5%.
CAPEX is quite volatile: £1m in FY2020, £2m in FY2019, £8m in FY2018, £8m in FY2017, £1m in FY2016
The company has highly profitable business model: ROIC is 13.5%

Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

The company's Revenue increased slightly on 1.6%. Revenue decline was accelerating on average at -6.5 pp per annum in FY2016-FY2020. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.9 pp from 14.5% to 18.4% in FY2020. During the last 5 years EBITDA Margin bottomed in FY2017 at 20.6% and was growing since that time.

SG&A as a % of Revenue showed almost no change in FY2020. During FY2016-FY2020 SG&A as a % of Revenue topped in FY2018 at 21.9% and was declining since that time.

Net Income margin increased on 3.8 pp from 13.6% to 17.4% in FY2020. Net Income margin grew at 1.1 pp per annum in FY2016-FY2020.

Investments (CAPEX, working capital and M&A)

Mattioli Woods's CAPEX/Revenue was 1.4% in FY2020. Mattioli Woods showed big decline in CAPEX/Revenue of 14.9 pp from 16.3% in FY2017 to 1.4% in FY2020. Average CAPEX/Revenue for the last three years was 5.9%. During FY2016-FY2020 CAPEX as a % of Revenue topped in FY2017 at 16.3% and was declining since that time.

Return on investment

The company operates at good ROIC (13.5%) while ROE is low (11.5%). ROIC increased on 2.8 pp from 10.7% to 13.5% in FY2020. ROE increased slightly on 2.0 pp from 9.5% to 11.5% in FY2020.

Leverage (Debt)

Debt level is -1.3x Net Debt / EBITDA and 0.2x Debt / EBITDA. Debt surged while cash jumped on 11.7%.

Mattioli Woods has no short term refinancing risk: cash is higher than short term debt (2,692.8%).

Valuation and dividends

Mattioli Woods's trades at EV/EBITDA 8.8x and P/E 17.8x.

Financial and operational results

FY ended 31 May 2020

Mattioli Woods ($MTW) key annual financial indicators

mln. £	2016	2017	2018	2019	2020	2020/2019
P&L
Revenue	42.950	50.533	58.669	57.494	58.407	1.6%
SG&A	7.807	9.465	12.833	10.771	10.897	1.2%
EBITDA	8.941	10.394	12.664	13.570	17.929	32.1%
Net Income	5.245	6.356	8.190	7.811	10.173	30.2%
Balance Sheet
Cash	29.809	22.979	23.668	23.248	25.959	11.7%
Short Term Debt	0.000	0.000	0.000	0.000	0.964
Long Term Debt	0.000	0.000	0.000	0.000	1.944
Cash flow
Capex	1.115	8.225	7.773	1.680	0.818	-51.3%
Ratios
Revenue growth	24.3%	17.7%	16.1%	-2.0%	1.6%
EBITDA growth	20.8%	16.3%	21.8%	7.2%	32.1%

EBITDA Margin	20.8%	20.6%	21.6%	23.6%	30.7%	7.1%
SG&A, % of revenue	18.2%	18.7%	21.9%	18.7%	18.7%	-0.1%
Net Income Margin	12.2%	12.6%	14.0%	13.6%	17.4%	3.8%
CAPEX, % of revenue	2.6%	16.3%	13.2%	2.9%	1.4%	-1.5%

ROIC	12.1%	10.8%	12.2%	10.7%	13.5%	2.8%
ROE	10.0%	9.2%	10.8%	9.5%	11.5%	2.0%
Net Debt/EBITDA	-3.3x	-2.2x	-1.9x	-1.7x	-1.3x	0.4x

Peers in Financial Services

Below we provide Mattioli Woods benchmarking against other companies in Financial Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %


Top 5	FY2016	FY2017	FY2018	FY2019	FY2020
Mxc Capital ($MXCP)	118.4%	-3.5%	-76.6%	214.9%	-
Afh Financial Group ($AFHP)	15.0%	39.4%	50.6%	46.7%	-
Private & Commercial Finance Group ($PCF)	13.2%	-60.1%	22.4%	36.2%	-
Commercial Bank Of Qatar(The) ($CBQS)	1.7%	6.1%	17.8%	12.4%	-
Impax Asset Management Group ($IPX)	6.8%	55.2%	100.9%	12.2%	-
Median (16 companies)	4.8%	12.9%	14.3%	6.5%	-
Mattioli Woods ($MTW)	-	17.7%	16.1%	-2.0%	1.6%

Top companies by Gross margin, %


Top	FY2016	FY2017	FY2018	FY2019	FY2020
1Pm ($OPM)	64.3%	64.0%	66.3%	67.7%	-
Afh Financial Group ($AFHP)	55.4%	53.4%	54.4%	53.4%	-
Starvest ($SVE)	38.4%	49.4%	-	18.5%	-
Median (3 companies)	59.3%	51.4%	54.1%	53.4%	-

Top companies by EBITDA margin, %


Top 5	FY2016	FY2017	FY2018	FY2019	FY2020
Mxc Capital ($MXCP)	105.4%	-263.1%	-755.1%	299.5%	-
Starvest ($SVE)	63.4%	56.4%	-	134.5%	-
Ashmore Group ($ASHM)	57.1%	65.0%	63.6%	62.1%	-
Plus500 Ltd ($PLUS)	46.0%	59.3%	70.2%	54.2%	-
City Of London Investment Group ($CLIG)	32.5%	37.5%	37.8%	33.9%	-
Median (11 companies)	20.8%	23.5%	26.7%	29.5%	-
Mattioli Woods ($MTW)	20.8%	20.6%	21.6%	23.6%	30.7%

Top companies by CAPEX/Revenue, %


Top 5	FY2016	FY2017	FY2018	FY2019	FY2020
1Pm ($OPM)	4.4%	6.4%	3.4%	2.4%	-
Commercial Bank Of Qatar(The) ($CBQS)	3.3%	1.8%	3.8%	1.9%	-
City Of London Investment Group ($CLIG)	0.6%	1.6%	0.4%	1.3%	-
Afh Financial Group ($AFHP)	1.8%	0.8%	0.5%	1.1%	-
Tungsten Corp ($TUNG)	1.0%	0.9%	1.0%	0.9%	-
Median (14 companies)	0.9%	1.0%	1.0%	0.5%	-
Mattioli Woods ($MTW)	2.6%	16.3%	13.2%	2.9%	1.4%

Top companies by ROIC, %


Top 5	FY2016	FY2017	FY2018	FY2019	FY2020
Plus500 Ltd ($PLUS)	118.9%	143.2%	196.2%	65.4%	-
City Of London Investment Group ($CLIG)	55.3%	71.6%	63.7%	47.5%	-
Impax Asset Management Group ($IPX)	15.0%	19.7%	30.7%	28.8%	-
Ashmore Group ($ASHM)	17.6%	23.5%	24.3%	23.9%	-
Starvest ($SVE)	5.9%	18.5%	-18.6%	21.4%	-
Median (19 companies)	8.6%	9.6%	7.5%	8.9%	-
Mattioli Woods ($MTW)	12.1%	10.8%	12.2%	10.7%	13.5%

Top companies by Net Debt / EBITDA


Top 5	FY2016	FY2017	FY2018	FY2019	FY2020
Redde ($REDD)	1.3x	1.3x	1.8x	1.6x	-
Afh Financial Group ($AFHP)	-1.0x	-1.1x	-1.8x	0.2x	-
1Pm ($OPM)	0.2x	-0.2x	0.3x	0.2x	-
Starvest ($SVE)	-0.1x	-1.5x	-	-0.2x	-
Impax Asset Management Group ($IPX)	-0.6x	-2.0x	-0.3x	-0.5x	-
Median (11 companies)	-1.0x	-1.3x	-0.9x	-1.3x	-
Mattioli Woods ($MTW)	-3.3x	-2.2x	-1.9x	-1.7x	-1.3x

Mattioli Woods stock price chart

Mattioli Woods financials

mln.	FY2015	FY2016	FY2017

Revenue	34.565	42.950	50.533
EBITDA	7.401	8.941	10.394
Net income	4.022	5.245	6.356
CAPEX	0.603	1.115	8.225
Debt	0.000	0.000	0.000
Cash	10.570	29.809	22.979

About Mattioli Woods

Mattioli Woods plc, together with its subsidiaries, provides pension consulting and administration, wealth management, syndicated property investment, and employee benefits consultancy services in the United Kingdom. It operates through Direct Pension Consultancy and Administration, Third Party Pension Administration, Wealth Management, Property Management, and Employee Benefits segments. The company offers self-invested personal and small self-administered pension schemes, and trustee services; and ISA investment services and structured products. It also provides portfolio management services; financial planning services, such as wealth building, trust planning, inheritance tax and estate planning, exit planning, and executive financial planning; and commercial and residential property mortgage advice, custodian REITs management, and property insurance services. In addition, the company offers advice and assistance on a range of personal insurance products, which include life assurance medical insurance, critical illness, income protection, shareholder protection, and key person protection. Further, it provides employee benefit services, including due diligence; workplace savings services, such as audit and review, implementation, administration, annual governance reporting, communication to members, legislative updates, and auto-enrolment compliance; and flexible benefits, including total reward statements, voluntary benefits, create, and communication of benefits. Additionally, the company offers private medical insurance, health cash plans, and dental plans; non-pension related insured benefits; advising on international and multinational benefits; and consultancy and employee benefit audit, and project management services. The company offers its services to controlling directors, owner-managed businesses, professionals, executives, and affluent retirees. Mattioli Woods plc was founded in 1991 and is headquartered in Leicester, the United Kingdom.