Insider Media Limited

A slowdown in investment activity has been attributed to a 17 per cent drop in pre-tax profits at wealth management firm Mattioli Woods. The Leicester-based company said it expects activity to grow over the year as confidence in the market grows.

For the six months ending 30 November, Mattioli Woods' profit before tax sunk from £2.42m to £2m; a 17.4 per cent fall.

However, revenue was up 17 per cent to £8.69m, having grown from £6.43m in the comparable 2010 period.

Over the period, the company acquired employee benefits and wealth management business Kudos for £8.7m.

Chief executive Ian Mattioli said the integration of the Aberdeen-based business was "progressing well".

"Kudos has proven to be an excellent cultural fit and represents an exciting step forward in the development of the group as a broader wealth management business," he added.

Despite a fall in profit, the company paid out an increased interim dividend of 1.85 pence per ordinary share. This represents a 12.1 per cent rise on the same period in 2010. The company said it remained committed to "growing the dividend sensibly, whilst maintaining an appropriate level of dividend cover".

Executive chairman Bob Woods said the company had anticipated a contraction in margin as it spent money investing in the business to secure growth.

"This was coupled with a slowdown in investment activity in the first half," he said. "Our response to the Eurozone crisis has been to keep clients informed and recommend the maintenance of defensive positions.

"While uncertainties over Europe persist, we expect to see increased activity in the second half of this financial year as we advise on the repositioning of clients' retirement and investment strategies."

At the period end, the company had net cash totalling £3.36m, an increase on its 2010 result of £1.75m.

Total assets under administration and advice were up 28.8 per cent to £2.86bn at the period end, said Mattioli Woods.

"I anticipate we will see increased activity during the remainder of this financial year," said Mattioli. "If this proves to be the case, I believe we can maintain our record of revenue and profit growth for the full year."