TIDMAFHP TIDMAFHB
RNS Number : 0493O
AFH Financial Group Plc
30 September 2019
30 September 2019
AFH FINANCIAL GROUP PLC
("AFH" or the "Company")
Business update
AFH Financial Group plc (AIM: AFHP), a leading financial
planning led wealth management firm, is pleased to provide the
following business update.
As reported to the market on 13 September 2019, the Company
continues to enjoy strong organic inflows of funds from existing
and new clients with low redemptions. During the current year
double digit gross inflows continue to be achieved whilst outflows,
including pension drawdowns, remain below 2%.
Following AFH's three recent acquisitions of IFA businesses,
bringing the total committed spend to GBP10.3 million since the
GBP15 million Convertible Loan Stock placing in July 2019, the
combined maximum committed spend for the seven acquisitions made in
the current financial year is GBP29.9 million, of which GBP12.8
million was paid as initial consideration. The balance, which is
entirely dependent on the performance of the acquisitions during
the next two years, will be paid over the next three financial
periods.
The Company's key strategic objective remains to become the
number one financial planning-led wealth manager in the UK. As part
of its business review and annual budget process the Board has
evaluated its growth strategy in the light of the three to five
year aspirations announced to the market in January 2019.
The Board reaffirms these aspirations of achieving Funds under
Management of GBP10 billion; Revenues per annum of GBP140 million;
and Underlying EBITDA margin of 25% on revenue whilst confirming
its intention, as set out in recent statements to the market, to
focus on driving the organic growth of the business, providing
professional and cost-effective services to clients and, in-turn,
enhancing profitability and shareholder return.
Since the Company was admitted to AIM in 2014, AFH has completed
50 acquisitions providing the size and profitability that the Board
believed necessary to create a leading national advice led wealth
management group. This in tandem with strong organic growth has
enabled the Company to grow revenues by approximately 400% and
earnings per share by approximately 600% during the period.
A consolidation strategy generally relies on an element of
arbitrage to exist between the Company and the acquisition target
where the multiple paid for acquisitions is below the multiple at
which the acquirer's shares are traded, both to ensure accretion
for existing shareholders and to compensate for any inherent risk
in acquiring businesses.
In 2016, following a significant number of acquisitions, AFH
decided that in the uncertain political and economic climate it
would de-risk its model through a period of consolidation,
cementing the integration of acquisitions completed during the
previous twelve months and focusing on organic growth. This period
of consolidation confirmed the Company's ability to grow
organically, during which Funds under Management grew by 11% and
cash generated from operations represented 95% of EBITDA reported
for the year, whilst significantly reducing the level of
outstanding deferred consideration on the balance sheet and
increasing the cash generation and working capital of the
business.
The Board considers that many of the economic and political
factors that existed in 2016 are again present and will influence
investor behaviour for the foreseeable future. Therefore, following
completion of the remaining acquisition opportunities identified to
the market at the time of the Convertible Loan Stock placing in
July 2019 and currently undergoing due diligence, the Board intends
to focus the Company's resources on organic revenue growth
complemented by the use of technology to enhance productivity and
drive operational efficiencies within its two operating divisions.
This strategy is expected to unlock future working capital and,
following the payment of deferred considerations as they become
due, provide free cashflow to finance additional acquisitions in
the future and deliver an appropriate level of ongoing dividends to
shareholders.
As an outcome of this strategy the Company does not anticipate
requiring any additional funding from the equity market in the
foreseeable future as growth will be funded from working
capital.
Commenting Alan Hudson, Chief Executive of AFH said:
"The growth and strategy of the Company has created a
proposition for our clients that combines a market leading client
centric service with a competitive cost model and has created a USP
from which to achieve our three to five year aspirations.
"We seek to align our growth with operational efficiencies and
during the current year the Company has invested heavily in digital
marketing and IT infrastructure, all of which has been expensed,
whilst absorbing the cost of clients using our Pershing-enabled AFH
Direct platform.
"We were pleased to report robust growth in H1 2019, in May
2019, confirming strong growth in excess of 50% at Revenue, EBITDA
and EPS levels and are pleased to confirm that during H2 the
business has continued to perform well.
"We look forward to providing a full trading update to the
market in early November following the end of our financial year on
31 October 2019."
Enquiries:
AFH Financial Group PLC 01527 577 775
Alan Hudson, Chief Executive Officer
Paul Wright, Chief Financial Officer
Liberum (Nominated Adviser and Joint Broker) 020 3100 2000
Richard Bootle / Euan Brown / Kane Collings
Shore Capital (Joint Broker) 020 7408 4090
Hugh Morgan / Edward Mansfield / Daniel Bush
Yellow Jersey PR Limited (Financial PR) 077 4884 3871
Felicity Winkles / Joe Burgess / Annabel Atkins
Notes to Editors
AFH Financial Group (AIM: AFHP) is a leading UK financial
planning-led wealth management firm based in the Midlands. Founded
in 1990 by CEO Alan Hudson, the Company provides wealth management
and financial advisory services to over 20,000 clients in the UK.
These services are delivered by over 450 professional advisers and
400 support staff.
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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