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Smith and Williamson announces modest growth; profits dip – with further investment

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Smith & Williamson has posted fee income of £222.5m in the year ending April 2016, during a period of further investment.

Fee income increased 3.4% in 2016, from £215m. Net owned cash climbed to £142.5m, compared to £136.7m a year earlier. However, profits fell to £36m, from a record £41m in 2015.

“This is a pleasing result, given the uncertain operating environment, and building on last year’s exceptionally strong performance,” said Kevin Stopps (left), co-chief executive of Smith & Williamson and managing partner.

David Cobb (pictured right), co-chief executive of Smith & Williamson and head of investment management and banking, added: “The growth reflects the momentum we have built in the business due to the hard work of our colleagues and we remain strong to capitalise on future improvements.”

Headcount rose 7% as investment in fee-earning teams continued, including the recruitment of 16 client-facing partners, directors and associate directors. The firm is also undergoing a period of investment in client teams and infrastructure enhancements to support front line services.

Operating revenue for tax and business services rose by 7.1% to £105.2m, compared to £98.2m in 2015, 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% despite a challenging market environment, during which the FTSE 100 fell by 10.3% and the FTSE WMA Stock Market Balanced Index fell by 3.9%. Funds under management and advice during the period were relatively stable and have since grown to exceed £17bn, their highest ever level.

“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,” said Kevin Stopps.

Expansion of their activities in Jersey will include an investment management team, operating as Smith & Williamson International. Further improvements include a new private client portal that will go live next year and a new logo and website design.

Cobb added: “Against the background of weak markets during the period, revenues for the investment management and banking division have held up well thanks to solid underlying organic growth. Our strategic plan is to further realise our opportunity to be the leading independent provider.”

Stopps continued: “We are managing Smith & Williamson for the long term. Therefore, we have continued with our substantial programme of investment in infrastructure and front line services. The changing market environment creates opportunities for us and we are well placed to capitalise on developments.”

Key areas of focus for the year ahead included scaling up businesses, providing complimentary advisory services for private clients, servicing international clients, developing pooled funds business.

“We remain cautiously optimistic about the outlook for the UK economy as the moderate recovery appears to be continuing. However, following the outcome of the EU referendum, political uncertainties are likely to persist over the short-medium term and we expect more volatility in the markets,” concluded Cobb.

The firm currently resides at 8th in the 2016 Top 50+50 Survey supported by Sage.

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