AFH benefits from AIM move with increased revenue and profits

WORCESTERSHIRE IFA AFH Financial has announced a positive set of full year results and the first since the company’s switch to the Alternative Investment Market (AIM) last year.

The enhanced fundraising abilities have seen the Bromsgrove-based business achieve a like-for-like revenue increase of 40% to £15m compared to the previous year (£10.7m). Gross margins remained at 51%, while recurring revenue increased to 55% of total revenue (2013: 50%).

Reported pre-tax profit increased to £1,057,000 (2013: £1,049,000). The tax charge for the year was also increased to 30% as a result of non-tax deductibility for exceptional IPO costs.  

Earnings per share were impacted by the April and June share issues, the net proceeds of which were used for acquisitions in quarter four and the first half of the new financial year. However, the group said the benefits of this would be realised in 2015 and future years. Adding back the effect of the exceptional IPO costs adjusted EPS fell to 4.7p per share (2013: 5.3p).

As of October 31, 2014 (year-end), the group remained free of bank or other secured debt and held cash and cash equivalents of £5.7m (Year-end 2013: £4.3m) reflecting both the positive cash generation of the business during the year and the balance of the funds raised in April 2014 and June 2014. As a result, the group said it remained well placed to make further acquisitions as opportunities arose.

The group said it intended to propose a dividend of 1.5p per share, an increase of 20% over 2014 (1.25p per share). Subject to shareholders’ approval the dividend will be paid on May 22, 2015 to shareholders on the register by April 24, 2015.

The year saw the completion of seven acquisitions which saw the total number of advisers increase to 136 (Year-end 2013: 122). The acquisition saw the company move into Scotland, Cornwall and East Anglia, and funds under management now exceed £1bn for the first time.

It has also identified a strong acquisition pipeline – from single person businesses to small-to-medium corporates.

Commenting on the results, John Wheatley, chairman of AFH and Alan Hudson, chief executive of AFH, said: “The current year has started in line with trading levels experienced during the second half of 2014 with recurring revenue continuing to grow in line with the directors’ expectations.

“The group’s acquisition pipeline remains strong and the group’s cash reserves will allow it to take advantage of the active M&A market in the IFA sector to meet its strategic aims in 2015 and future periods.”

They said a number of acquisitions forecast to complete during Q1 2015 were delayed as a result of changes in regulatory authorisation procedures and while three of the deals completed in February 2015 will increase the ongoing revenue run rate to the expected level, they are expected to have a minimal impact in H1 2015 and this is likely to have a short term impact on first half revenue growth.