Smith & Williamson has reported a 3.4% rise in operating income to £222.5m for the year ending 30 April 2016, around half the previous year’s increase, during what the firm described as a sustained period of investment in client teams and infrastructure enhancements which had an impact on profits
Kevin Stopps, co-chief executive of Smith & Williamson and managing partner of tax and business services, said: ‘This is a pleasing result given the uncertain operating environment in the period and demonstrates continued growth in fee income, building on last year’s exceptionally strong performance.’
The firm’s 2015 operating income total was £215m, up by 8% on £199.1m in 2014.
Smith & Williamson, which is ranked eighth in the Accountancy league table, says both the tax and business services and investment management and banking divisions generated growth. Operating revenue for tax and business services rose by 7.1% to £105.2m (2015: £98.2m) with notable increases across audit and business assurance, corporate finance, forensics, financial services and fund administration.
Fees and commission income for investment management and banking were up 0.6% to £115.9m (2015: 115.2m) reflecting a challenging market environment. Funds under management and advice during the period were relatively stable and have since grown to exceed £17bn (at 31 July 2016), their highest ever level.
Smith & Williamson reported growth in net own cash and cash equivalents to £142.5m (2015: 136.7m), and said it had made substantial investment over the year as part of what Stopps called ‘managing for the long term’.
This included a 7% increase in headcount, expansion of its activities in Jersey to include an investment management team, and the development of a new private client portal, due to go live during the next financial year. The firm has also completed a visual identity refresh and redesigned its website.
Stopps said: ‘Adjusted operating profit for the 2015-16 year was £36m, a dip from last year’s record of £41m, representing a very solid result given the investment made to support growth in a number of business areas and to strengthen central teams in the past 18 months.
‘If the impact of our investment in central functions is removed, the adjusted operating profit for the group for the last year would have been £39.8m, equivalent of a reduction of 3.2% on the prior year.’
Smith & Williamson remains ‘cautiously optimistic’ about the outlook for the UK economy, and key areas of focus for the year ahead include participation in the Scale-Up Institute, encouraging the growth of scale-up businesses, expanding complementary financial advisory services for private clients, and enhancing its investment management services through the new team in Jersey.
Stopps said: ‘The changing market environment creates opportunities for us while our investment and position as a provider of a unique range of complementary financial services means we are well placed to capitalise on developments.’
