TIDMAFHP TIDMAFHB
RNS Number : 8815S
AFH Financial Group Plc
11 November 2019
11 November 2019
AFH FINANCIAL GROUP PLC
("AFH" or the "Company" or "Group")
TRADING UPDATE
FIFTH CONSECUTIVE YEAR OF STRONG REVENUE AND EARNINGS GROWTH
The Board of AFH, a leading financial planning led wealth
management firm, is pleased to provide the following update on
trading for the twelve months ended 31 October 2019, a period
reflecting a fifth successive year of strong growth and increased
profitability.
Financial highlights
-- Revenues for the year expected to exceed GBP74m, (2018:
GBP50.6m), of which over GBP29m was generated through new
business
-- Continued expansion of EBITDA margin, reflecting operational gearing
-- Underlying* EBITDA expected to exceed GBP17m, (2018: GBP10.4m)
-- Funds under Management ("FUM") reached GBP6.0bn in October 2019 (2018: GBP4.4bn)
-- Fifth successive year of increased Earnings per Share
attributable to shareholders, which supported a 50% increase in the
dividends paid during the year
-- Board remains confident of the Company's prospects and
achieving its stated aspirations of revenues of GBP140m,
underlying* EBITDA margin of 25% and GBP10bn Funds under
Management
* Underlying excludes the one-off exceptional financing costs of
the CULS.
Confidence in strategy and outlook
-- 8 acquisitions completed during the year, total capped consideration of GBP30m
-- Integration of current and prior year acquisitions continued in line with the AFH model
-- Board to focus on organic growth and cash generation going
forward, as reported in September 2019
-- Protection revenue model adjusted from 1 November 2019 to
ensure greater cash generation and reduced working capital
needs
-- Cash balances as at 31 October 2019 of GBP11.9m
During the last twelve months, the Company has enjoyed strong
organic growth, with a significant increase in its recurring fee
income, and has completed the acquisition of 8 businesses,
extending both the Company's size and geographical footprint. Total
revenues for the full year are expected to exceed GBP74m (2018:
GBP50.6m), of which approximately GBP6.5m was generated from
acquisitions completed during the year.
The Company continued to generate operational efficiencies
which, together with the growth of the business, is expected to
enable AFH to report both increased EBITDA per share together with
a further increase in the EBITDA margin. This margin increase is
the fifth consecutive year of margin enhancement and represents a
significant move towards our aspirational target of a 25% EBITDA
margin.
Significant growth continues to be driven by organic new
business generation. Of the expected total revenue of GBP74m for
the year over GBP40m was represented by recurring business whilst
over GBP29m was new business written by our advisers. Over GBP450m
of gross funds were received from new and existing clients,
representing year on year growth above 10%. As previously reported
net outflows, including pension drawdown, continue to be below 2%
of total Funds under Management. In addition, eight acquisitions
were completed during the year adding over GBP1bn to the Company's
FUM.
During the year the Company paid over GBP8m in deferred earn out
consideration in respect of acquisitions from prior years
reflecting the continued performance of those businesses.
The Company raised GBP15m (gross) in July 2019 through the
placing of 4% Convertible Unsecured Loan Stocks ("CULS") 2024, with
a five-year conversion price of 420p, introducing a number of new
institutional investors to the Company. Over 65% of the funds
raised from the CULS were used to make new acquisitions during the
fourth quarter, which are expected to drive future earnings per
share.
As indicated to the market at the time of the CULS placing the
Company has looked at other forms of financing and following the
year end, entered into a five-year GBP12 million facility agreement
with HSBC. No drawings have been made on this facility.
The Board remains confident of the prospects for further
profitable expansion and reaffirms its three to five year
aspirations of achieving Funds under Management of GBP10bn;
Revenues per annum of GBP140m; and Underlying EBITDA margin of
25%.
Commenting, Alan Hudson, Chief Executive of AFH, said:
"The performance of AFH over the course of the year demonstrates
the success of the Group's strategy and business model. We
maintained our strong levels of growth, both organically and
through acquisitions, and continue to deliver on our ambitious
targets. We have seen five consecutive years of growth and
profitability since joining AIM as well as solid increases in FUM
with low withdrawal rates and will continue to drive for further
operational efficiency and increased margins going forward.
"The recent refinement of our model to place a greater focus on
cash generation in these uncertain political and economic times
will put AFH in a strong position as we enter the new year,
focusing on organic growth and paying down our deferred earn-outs.
This will free up significant cash flow in the medium term and
enable us to continue to deliver on our goals without requiring
further funding from the equity markets. We have consistently
delivered strong levels of organic growth outside of our buy and
build strategy over the last few years and are confident in our
ability to deliver further value to shareholders following this
change of focus.
"Demand for advisory services in the UK continues to grow - the
population is living and working for longer and there exists a
significant savings and advice gap. The directors believe that AFH
is well placed to benefit from this trend. Our client focussed
approach and our growing AFH community creates a commercial
advantage for our clients when compared to both small IFAs and
traditional wealth managers. Investment made to digitise parts of
the business, as well as diversification into our complementary
protection broking business over the past few years, have helped
the Group to achieve its goals in a less than benign macro-economic
environment, leaving us in good stead to continue on our growth
trajectory.
"Given the strong performance over the year it has been
frustrating that the valuation multiple of the Group has fallen
significantly below that of the sector average in spite of our
continued growth and increased shareholder return. We continue to
focus on delivering shareholder value through the profitable growth
of the business.
"We look to the future with confidence to continue building AFH
into the leading financial planning led wealth manager in the
UK."
Enquiries:
AFH Financial Group PLC
Alan Hudson, Chief Executive Officer
Paul Wright, Chief Financial Officer +44 (0)1527 577
www.afhfinancialgroup.com 775
Liberum (Nominated Adviser and Broker)
John Fishley / Richard Bootle / Euan Brown +44 (0)20 3100 2000
Shore Capital (Joint Broker)
Hugh Morgan / Edward Mansfield / Daniel Bush +44 (0)20 7408 4090
Yellow Jersey PR (Financial PR) +44 (0) 20 3004
Joe Burgess / Georgia Colkin / Annabel Atkins 9512
This announcement is released by AFH Financial Group plc and
contains inside information for the purposes of Article 7 of the
Market Abuse Regulation (EU) 596/2014 (MAR), and is disclosed in
accordance with the Company's obligations under Article 17 of
MAR.
For the purposes of MAR and Article 2 of Commission Implementing
Regulation (EU) 2016/1055, this announcement is being made on
behalf of the Company by Paul Wright, Chief Financial Officer.
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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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